MJ Gleeson plcReport and Accounts2016builders for generations MJ Gleeson plc
Our twin track strategy – the development of low
cost homes for open market sale in the North of
England and strategic land sales in the South –
goes from strength to strength, delivering increased
margins, profits and cash.
Gleeson Homes continues to see strong customer
demand for its low cost homes. The opening of
two new regional offices and the increase in its
land pipeline to 9,284 plots will enable the division
to continue to grow in what remains a strong
market for low cost homes in the North of England.
We have commenced rolling out our distinctive
and highly successful business model across a
wider geographic area. The potential number of
purchasers of Gleeson homes in this wider area is
three times the comparable figure within our
current market.
Similarly, Gleeson Strategic Land continues to
see strong demand for consented land in prime
locations from a wide range of housebuilders.
The division has a strong pipeline of sites,
predominantly in the South of England, covering
3,843 acres (2015: 3,936 acres), and expects
to continue to enjoy a high level of success in
promoting commercially attractive sites through
the planning system.
The Board has every confidence in the Group’s
outlook in both the short and longer term.
Contents
1
2
4
5
8
10
12
14
18
20
Financial Highlights
Chairman’s Statement
Strategic Report
Group Businesses
Strategic Development and
Priorities
Business Performance
Key Performance Indicators (KPIs)
Financial Review
Operating Risk Statement
Corporate Social Responsibility
Report
28 Corporate Governance
29
Chairman’s Introduction
30
32
39
Board of Directors
Directors’ Report
Corporate Governance Statement
44 Remuneration Committee
Report
Chairman’s Summary Statement
Remuneration Policy Report
Annual Report on Remuneration
45
48
58
64 Financial Statements
Statement of Directors’
65
Responsibilities
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Consolidated Statement of Financial
Position
Consolidated Statement of Changes
in Equity
Consolidated Statement of Cashflow
Notes to the Financial Statements
66
68
68
69
70
72
74
102 Further Information
103 Five Year Review
104 Corporate Directory
104 Shareholder Information
104 Financial Calendar
Financial Highlights
Group revenue
+21%
2016: £142.1m, 2015: £117.6m
Profit before tax
+63%
2016: £28.2m, 2015: £17.3m
Normalised
earnings per share 2
+25%
Operating profit
before exceptional
items
+21%
Net cashflow 1
+72%
2016: £13.9m, 2015: £8.1m
Dividend for the
year
+45%
2016: 42.6 pence, 2015: 34.2 pence
2016: £28.2m, 2015: £23.3m
2016: 14.5 pence, 2015: 10.0 pence
1 From operating and investing activities.
2 Normalised earnings per share exclude the impact of exceptional items (2016: £nil, 2015: £6.1m).
Carlisle Park, Swinton
1
1
Chairman’s Statement
Financial performance
Group revenues increased by 20.8% to
£142.1m (2015: £117.6m). The Group
recorded an operating profit from
continuing operations of £28.2m, an
increase compared to the previous
year of 28.2% (2015: £22.0m). The
post-tax loss from discontinued
operations was £0.3m (2015: £0.2m).
Profit before tax increased by 63.0%
to £28.2m (2015: £17.3m). Profit for
the year attributable to equity holders
of the parent company was £23.0m
(2015: £12.2m).
Gross margin on unit sales increased to
31.1% (2015: 29.6%), which helped to
improve operating margin on unit sales
to 17.1% (2015: 15.8%).
Net assets increased by 12.0%
to £152.9m (2015: £136.5m),
representing net assets per share of
283p (2015: 254p). Cash and cash
equivalents at 30 June 2016 totalled
£23.2m (2015: £15.8m).
Normalised basic earnings per share,
excluding the impact of exceptional
costs (2016: £nil, 2015: £6.1m) grew
by 24.6% to 42.6p (2015: 34.2p).
Market context
Demand for low cost homes in the
North of England remains strong.
Hard working, low income families
remain committed to home ownership
and the cost of owning a Gleeson
home is, in many cases, cheaper than
an equivalent council house rent. The
Government’s support through the
Help to Buy Scheme, which has been
extended to 2021, and rigorous control
of costs in Gleeson Homes means that
our selling prices remain exceptionally
affordable.
Our mortgage advisors and other
organisations with whom we work very
closely, including on-line property
websites, also report that there has
been no drop in enquiries or demand
for new homes. Gleeson Strategic
Land has seen two of the major
housebuilders try to renegotiate the
terms of purchase, but mid-range
housebuilders, who need replacement
sites and are more interested in
completing deals promptly, continue to
bid competitively on all our land sales.
Overall the “Brexit” vote has not
had a material effect on the Group’s
expectations. It is very much “business
as usual”.
Land
For Gleeson Homes, land continues
to be available at relatively low
cost. The division’s land pipeline
grew to a record high of 117 sites
(2015: 97), comprising 9,284 plots
owned or conditionally purchased
(2015: 7,496). Gleeson Homes intends
to commence building low cost homes
on every site as soon as planning
permission is obtained.
The division’s strategic objective of
1,000 unit completions per annum
is within sight and, as set out in
the Strategic Report, we are taking
advantage of the opportunity for
substantial growth beyond this figure
by rolling out the division’s distinctive
and highly successful business model
across a wider geographical area.
Gleeson Strategic Land has a record
number of sites in the South of
England with planning consent or
resolution to grant. Demand for prime
sites in the South of England from a
wide range of housebuilders remains
strong.
Gleeson Homes has not seen any
change in customer enquiries or
sales due to the “Brexit” vote.
Employees
The Group’s strong performance during
the year reflects the remarkable
I am pleased to
report another year
of strong growth in
margins, profits
and cash.
Gleeson Homes increased unit
sales by 20.4% to 904 units
(2015: 751 units). Gross margins
continued to improve as a result
of a modest increase in selling
prices and stringent cost controls.
The division increased its land
pipeline by 20 sites, comprising
1,788 plots, taking advantage of
the relatively low land prices in
our target areas in the North of
England.
Gleeson Strategic Land increased
operating profit by 25.9% to
£10.2m. The division continued
to secure attractive residential
planning consents and to satisfy
demand for development sites
from both medium sized and
volume housebuilders.
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MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
dedication and professionalism of our
employees. On behalf of the Board,
I would like to congratulate and
thank them.
The average number of employees
during the year increased to 314
(2015: 266). The actual number of
employees at the year-end was 333
(2015: 290).
Dividends
Reflecting the Group’s strong financial
performance and our confidence in
the prospects for the current year and
beyond, the Board is recommending
a final dividend for the year of 10.0
pence per share (2015: 7.3 pence per
share). Combined with the interim
dividend, this will give a total dividend
for the year of 14.5 pence per share
(2015: 10.0 pence per share), an
increase compared to the previous
year of 45.0%. Subject to shareholder
approval at the Annual General
Meeting (“AGM”), the final dividend
will be paid on 15 December 2016 to
shareholders on the register at close
of business on 18 November 2016. The
Board aims to maintain dividend cover
between two and three times for the
foreseeable future.
Summary and outlook
We are in a strong position to deliver
further growth. Market demand
remains strong and Gleeson Homes’
growing land pipeline provides the
Creating safe, sustainable and vibrant communities
opportunity to open new sites in
both existing and new regions in the
North of England and the Midlands.
Demand for consented green field
sites in our Strategic Land division
also remains strong across a wide
range of housebuilders. Against this
background, the Board is confident
that the Group has significant scope to
grow both revenue and profits in the
current year and beyond.
Dermot Gleeson
Chairman
23 September 2016
THE GLEESON APPRENTICESHIP SCHEME
Since 2010 the Gleeson Apprenticeship Scheme has trained over 60 young people, giving them
invaluable site experience in the bricklaying and joinery trades, whilst allowing them time to
study for an NVQ at a local college. Find out more on page 25
THE GLEESON COMMUNITY SPORTS FOUNDATION
This year saw the 50th junior sports team sponsored through the Gleeson Community Sports
Foundation. This sponsorship is desperately required by local teams which are run by volunteers
and rely on these funds to keep their organisations running. Find out more on page 22
THE GLEESON COMMUNITY CHALLENGE
In 2015 Gleeson launched its inaugural Community Challenge Makeover. Local charities & non-
profit organisations were invited to apply for a makeover of their facilities, worth £10,000, with
all the works carried out by Gleeson’s construction team. Gleeson volunteers and subcontractors
kindly contributed their time and services to the project. Find out more on page 25
YOURWATCH
YourWatch provides our residents with the anonymity to report their concerns without
repercussion via the YourWatch website. We then share this information and where necessary,
send warnings through instant alerts straight into their inbox. Find out more on page 24
ENGAGEMENT WITH LOCAL SCHOOLS
Projects include asking pupils to suggest names for new roads on our developments and tapping
into their creativity by getting the school children to design their ‘dream’ bedroom in a shoebox
which we then recreate in our showhomes. Find out more on page 23
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Strategic Report
5
8
Group Businesses
14 Financial Review
Strategic Development and Priorities
18 Operating Risk Statement
10 Business Performance
20 Corporate Social Responsibility Report
12 Key Performance Indicators (KPIs)
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MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Knowsley Lane, Merseyside
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Group Businesses
The Group consists of two distinct but complementary businesses: housebuilding on brownfield land in the North of England
and strategic land trading, primarily in the South of England.
Gleeson Homes
Gleeson Strategic Land
No part exchange
Limited competition
Sustainable model
Positive
regeneration
credentials,
acceptable
to planners
Government
home ownership
stimulation
Significant and
motivated target
audience
Strong drivers for
increasing UK
housing stock
Planning expertise
and strong local
authority relationships
High demand,
low supply of
consented land
Nationwide
economic
growth
Improving
planning environment
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Statements
Further
Information
Gleeson Homes
Gleeson Homes: A housing regeneration specialist, working in challenging
communities to provide new homes for sale to people on low incomes in the
North of England.
Gleeson Homes continues to build significant value for shareholders as well as delivering a unique social benefit in helping
people on lower incomes move from housing poverty caused by the ‘rent trap’ into home ownership and wealth creation.
Our homes are affordable enough to be sold to a couple on the current national living wage and quite often mortgage
repayments are less than comparable council house rents.
Key features of the Gleeson Homes business model
► COMMUNITY REGENERATION: Over the years, Gleeson Homes has played a key role in regenerating challenging
communities. Through establishing strong relationships with local authorities, Gleeson Homes has created a ‘virtuous
circle’ in which it acquires and redevelops legacy sites where there is an obvious need for social and economic
regeneration and builds homes at affordable prices, thus enabling home ownership. This ‘virtuous circle’ will continue
to underpin the business and allows for future geographic expansion.
► SUCCESSFUL LAND PURCHASE: We partner with local authorities
and private land owners to acquire land in socially and
economically deprived areas which will benefit from
community regeneration. We have a very carefully
targeted land buying strategy that has clearly defined
and challenging hurdle rates.
► DRIVING DOWN BUILDING COSTS: We build
traditional two, three and four bedroom detached
and semi-detached homes. We ensure that our good
quality homes are built to the specification that our
customers desire.
► LOW OVERHEADS: We ensure that overhead costs are
kept low by having small and similarly structured
management teams in each operating region and by
continuously measuring their relative performance.
► ENABLING THE CUSTOMER: We offer our customers a range
of bespoke financial packages, including a deposit saving
scheme, to enable them to become homeowners.
Gleeson Homes
builds low cost
homes for people
on low incomes in
areas of industrial
decline and social
and economic
deprivation.
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MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Gleeson Strategic Land
Gleeson Strategic Land: A land promotion business that enhances the
value of land by securing residential planning consents. The primary focus
is on sites in the South of England likely to be attractive to a wide range of
developers.
Key features of the Gleeson Strategic Land business model
► ACHIEVING MUTUALLY BENEFICIAL AGREEMENTS WITH LANDOWNERS: We enter into agreements with landowners to
promote their land through the planning process.
► PROMOTION THROUGH THE PLANNING PROCESS: The business’s team of land surveyors and town planners, along with
legal and technical experts, steer the land through the planning process towards achieving a commercially attractive
residential planning consent.
► REALISING VALUE: We strive to ensure that the best value is achieved for all stakeholders by managing the sale of the
consented site to a developer.
Strategic Land
specialises in identifying
opportunities and
successfully manages
them through the
planning system.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Strategic Development and Priorities
BUILD QUALITY, SUSTAINABLE HOMES: We will build good
quality homes to the specification that our customers desire.
We will ensure that our homes are energy efficient and have
low running costs. We will use appropriate construction
methods to build efficiently.
INCREASE LAND PIPELINE: We will continue to acquire
land, at appropriate cost, in socially and economically
deprived areas, which would benefit from community
regeneration and we will start building as soon as we have
an implementable planning approval.
PROGRESS PLANNING APPLICATIONS: We will progress
planning applications on Strategic Land sites where we
consider there to be strong prospects for residential housing
planning permission to be achieved.
CASH GENERATION: We will maintain an appropriate capital
structure, minimise financing costs and continue to improve
returns to shareholders.
ROBUST HEALTH & SAFETY: We will continue to improve
our safety culture and will maintain a high level of
compliance with health and safety standards.
Discontinued operations
BUILDING AND ENGINEERING CONTRACTING
The Group sold certain contracts, assets and liabilities of
the Building Contracting Division and Engineering Division in
2005 and 2006. The activity of this division is now limited to
the resolution of contractual claims.
The strategy of the Group is to build a larger and
increasingly profitable business by increasing the number of
housing regeneration sites in its target markets, increasing
its housebuilding land pipeline and improving profitability
on the sale of individual units and of land with residential
planning permission.
Gleeson Homes has a proven and successful business model.
Working alongside local authorities, Gleeson Homes has
played a key role in regenerating whole communities,
allowing people to continue living in, or return to, their
home neighbourhoods.
We have been growing our regional footprint for some years
and we continue to do so. Two new regional offices were
opened during the year in Wakefield and St Helens, taking
the number of regional offices to six (including established
offices in Sheffield, Bury, Wynyard and Chester-le-Street).
Gleeson Homes believes its model of providing affordable
homes for people on low incomes in areas that are in need
of regeneration can also be rolled-out in other areas in the
North and Midlands.
Gleeson Homes is now comfortably in sight of its target of
1,000 unit completions per annum. We expect to reach this
target, on an annualised run rate basis, during the financial
year ending 30 June 2017. Once this milestone is reached,
we will outline new medium term growth targets.
Based on our estimate of the addressable customer base
within the expanded catchment area in which we intend
to grow, we believe that this business has the potential to
achieve a sales rate of 3,000 units per annum.
Our strategic priorities are set out below:
INCREASE HOUSEBUILDING FOOTPRINT: We will increase
the number of developments throughout our existing and
new operating areas and particularly in communities that
are in need of regeneration. Our business enables people
on lower incomes to become homeowners and regenerates
local communities in areas of social deprivation. This
strategic benefit is recognised by local authorities and
results in more opportunities for us to acquire brownfield
land at sensibly low prices, leading to increased sales
volumes and profitability whilst keeping average selling
prices (“ASPs”) low.
IMPROVE MARGINS: We will continue to control
development costs and acquire land in line with our
defined and challenging hurdle rates.
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MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Daniel and Zoe were keen to stay in the local
community close to their families and jobs at the
local Asda warehouse.
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Further
Information
Business Performance
Gleeson Homes
Units sold
+20%
Land pipeline
+24%
Operating profit
+33%
2016: 904 plots, 2015: 751 plots
2016: 9,284 units, 2015: 7,496 units
2016: £19.5m, 2015: £14.7m*
904 homes were sold during the
year, an increase of 20.4% on the
prior year’s total of 751. During
the year Gleeson Homes opened 18
new sites and had on average 43
selling outlets open compared to 39
during the prior year. The outlets
were located in Cleveland, County
Durham, Derbyshire, Lancashire,
Greater Manchester, Merseyside,
Northumberland, North Yorkshire,
Nottinghamshire, Tyne and Wear, South
Yorkshire and West Yorkshire. The
number of outlets at the end of the
year increased to 48 compared to 43
at the prior year end and is expected
to increase to over 50 during the
course of the current financial year.
87% reflecting the acceleration of sales
on our last remaining legacy site.
Gross profit margin on units sold
increased to 31.1% (2015: 29.6%) due
to increased average selling prices,
lower land costs and the maintenance
of a very stringent approach to cost
control.
The increase in the volume of homes
sold along with the improved gross
profit margin on units sold has resulted
in gross profit on units sold increasing
by 28.7% to £35.4m (2015: £27.5m).
There were no land sales within the
Homes division during the year (2015:
£2.7m gross profit on one land sale).
The ASP for the homes sold in the year
was £125,700 (2015: £123,750). The
increase was influenced by the mix of
outlets and unit-types. Our aim is to
keep ASP increases modest in order
to ensure that our homes remain
affordable to our customers.
The proportion of homes sold from
newer, higher margin sites reduced to
Operating profit on unit sales
increased 32.7% to £19.5m (2015:
£14.7m). Operating profit on land
sales was £nil (2015: £2.7m). Gleeson
Homes reported total operating profit
of £19.5m (2015: £17.4m).
Gleeson Homes has a large range of
bespoke packages to assist customers
to become homeowners, including
GLEESON HOMES MARGINS (%)*
Gross profit
Operating profit
29.8%
29.6%
31.1%
27.8%
8.4%
13.3%
15.8%
17.1%
“Save and Build”, “First Rung”,
“Advance to Buy”, and “Aspire to
Own”. The Government’s Help to Buy
Scheme remains popular amongst
many of our customers, with 61% of
the homes sold in the year utilising
this scheme.
Competition amongst mortgage lenders
has helped to both reduce borrowing
costs and to increase availability. A
range of mortgage lenders provide
finance to Gleeson home buyers and
the number of providers is increasing.
The recent reduction in bank base
rates has further reduced borrowing
costs and increased mortgage
affordability.
Gleeson Homes was able to continue
to acquire land in the North of
England and the Midlands at relatively
low cost. This was a busy year of
land acquisition which saw the land
pipeline grow by 20 sites to a total of
117 at year end; 35 new sites were
added to the pipeline, while 15 sites
were either completed or we did
not proceed to purchase. In terms
of units, the pipeline grew by 1,788
units to stand at 9,284 units at June
2016. Of these units 4,357 are owned
(2015: 3,680) and 4,927 units are
conditionally purchased (2015: 3,816).
In addition to owned and conditionally
purchased units, there are a further
997 units which are being actively
considered for acquisition but will only
proceed to purchase if they meet our
strict returns criteria.
2013
2014
2015
2016
*2015 excludes £2.7m profit on land sales
(2016: £nil)
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MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
20.4%
0.9%
2012
Strategic Report
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Remuneration
Committee Report
Financial
Statements
Further
Information
Business Performance
Gleeson Strategic Land
Revenue
+32%
2016: £28.4m, 2015: £21.5m
Operating profit
+26%
2016: £10.2m, 2015: £8.1m
Land sales
+40%
2016: 7 sites, 2015: 5 sites
Revenue from Gleeson Strategic Land
grew by 32.1% to £28.4m (2015: £21.5m)
which reflects an increase in the
number of successful land transactions
to 7 (2015: 5). Operating profit shows
the value added by the Gleeson Strategic
Land business on land transactions
during the year. Operating profit
increased by 25.9% to £10.2m (2015:
£8.1m). As with revenue, the profit
growth was driven by the increase in
transactions during the year.
We continued to see healthy demand
from a wide range of housebuilders
looking to acquire well located land
with planning consent and received
particularly strong interest from mid-
sized house builders.
The sites in Gleeson Strategic Land’s
portfolio are forecast to realise
maximum value over a mix of short,
medium and long term periods.
Currently 10 sites have planning
permission, 4 have a resolution to
grant, 15 have a planning application
submitted or are being appealed /
judicially challenged, and 12 have
applications being worked up prior
to submission. The balance of the
portfolio consists of sites which are
being promoted through local plans,
local development frameworks and /
or emerging neighbourhood plans.
This strong position provides
confidence in the division’s ability to
deliver reasonably consistent annual
returns.
At the year end, our Strategic Land
business had a portfolio totalling 68
sites (2015: 68 sites). We acquired
5 new sites and sold 7 sites in the
year. Two of the sites sold were split
prior to sale and one part of each
was retained. The portfolio comprises
3,843 acres (2015: 3,936 acres), of
which 178 acres (2015: 159 acres)
were wholly or part owned by the
Group; 2,115 acres (2015: 2,073 acres)
were held under option; and 1,550
acres (2015: 1,704 acres) were the
subject of promotion agreements.
The portfolio of sites continues to
have a geographic bias towards the
South of England, predominantly in
Buckinghamshire, Devon, Dorset,
Essex, Hampshire, Hertfordshire, Kent,
Oxfordshire, Somerset, Surrey, Sussex
and Wiltshire. The 68 sites have the
potential to deliver circa 21,111 plots
(2015: 21,150 plots).
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
MJ Gleeson Group plc: Report and Accounts for the year ended 30 June 2015
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Key Performance Indicators (KPIs)
REVENUE MEASURE
The strength of revenue is an
important measure of the success
of the business plan.
Revenue
+21%
Revenue (£m)
£142.1m
£117.6m
£81.4m
2016: £142.1m, 2015: £117.6m
2014
2015
2016
PROFIT MEASURES
Operating margin (%)
Profit before tax (£m)
18.7%
19.8%
£28.2m
14.8%
£17.3m
£12.2m
2014
2015
2016
2014
2015
2016
The Group’s operating margin
is an important measure of the
implementation of the business plan.
The Group’s operating profit margin
has shown continued improvement
as both divisions improved their
scale and profitability.
Profit before tax increased by 63.0%
in the year.
CASH MEASURE
The cash balance is used as a
measure of the strength of the
balance sheet and to confirm that
the Group has the funds necessary to
fulfil its growth strategy.
Cash and cash
equivalents
+47%
2016: £23.2m, 2015: £15.8m
RETURN MEASURE
The return measure illustrates how the business plan is improving shareholders’
returns over time. It is based on EBIT (earnings before interest and tax) before
exceptional items expressed as a percentage of average net assets after
deducting deferred tax balances and cash.
A combination of volume growth and margin improvements is delivering growth
in the return on capital employed.
Cash and cash
equivalents (£m)
£23.2m
£15.8m
£13.7m
2014
2015
2016
Return on capital
employed (%)
21.1%
23.2%
13.7%
2014
2015
2016
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MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Strategic Report
Corporate
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Statements
Further
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NON-FINANCIAL KPIs
Units (homes) sold by the Gleeson
Homes division during the year.
Land is a key raw material for the
Group’s businesses.
Gleeson Homes units sold
Gleeson Homes land site
pipeline (plots)
904
751
561
7,496
5,065
The land interest is held almost
entirely through promotion and
option agreements. Gleeson Strategic
Land benefits directly from the
value added.
Gleeson Strategic Land (gross acres)
9,284
3,802
3,936
3,843
2014
2015
2016
2014
2015
2016
2014
2015
2016
FORWARD SALES
Gleeson Homes has forward sales at 30 June 2016 of £50.6m (2015: £42.6m) being the value of homes that have been
reserved or exchanged. Gleeson Homes does not aggressively sell off-plan and will only accept a reservation when the
unit concerned has achieved a specified level of construction. This has the advantage of reducing the cancellation rate
and improving the accuracy of completion dates. It also makes it possible to monitor costs more accurately and to take
advantage of house price rises.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Financial Review
Highlights
• Revenue increased by 20.8% to £142.1m
• Gross margin on unit sales increased to 31.1% from 29.6%
• Operating margin on unit sales increased to 17.1% from 15.8%
• Profit before tax increased by 63.0% to £28.2m
• Normalised earnings per share* increased by 24.6% to 42.6 pence
• Cash balances increased by 46.8% to £23.2m
• Net assets per share increased by 11.4% to 283 pence per share
• Dividend for the year increased by 45.0% to 14.5 pence per share
* Normalised earnings per share exclude the impact of exceptional items (2016: £nil, 2015: £6.1m).
PROFIT BEFORE TAX (£m)
£28.2m
£17.3m
£12.2m
£5.8m
2013
2014
2015
2016
Consolidated Statement of
Comprehensive Income
Revenue increased by 20.8% in the year to £142.1m
(2015: £117.6m). The revenue of Gleeson Homes increased
by 18.2% to £113.6m (2015: £96.1m) due to a combination
of the 20.4% increase in homes sold to 904 (2015: 751) and a
1.6% increase in the average selling price to £125,700
(2015: £123,750). Revenue for Gleeson Strategic Land
increased by £6.9m to £28.4m, due to both the increased
sales activity during the year and the mix of sales.
Gross profit increased by 18.1% to £47.6m (2015: £40.3m).
The gross profit of Gleeson Homes increased by 16.8% to
£35.4m (2015: £30.3m) due to the increase in volume, lower
land costs and higher selling prices. The gross profit of
Gleeson Strategic Land increased by 22.0% to £12.2m
(2015: £10.0m) primarily due to the increase in sites sold
during the year.
Administrative expenses include the sales & marketing costs
for Gleeson Homes, along with the administrative overheads
for the whole Group. Overall administrative expenses
increased by £1.1m (6.0%). Prior year administrative costs
included £1.2m exceptional restructuring cost. Underlying
administrative costs increased by £2.4m (14.1%) as a result
of further investment for growth.
Operating profit from continuing operations was £28.2m
(2015: £22.0m) an increase of 28.2% over the previous year.
Growth in operating profit has been driven by strong
trading results in both Gleeson Homes and Gleeson Strategic
Land and the lower administrative costs of the Group head
office function.
14
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OPERATING PROFIT BY DIVISION
Excluding Group overheads
Gleeson Homes
Gleeson Strategic Land
£19.5m
£17.4m*
£9.4m
Tax
A tax charge for continuing operations of £4.9m
(2015: £4.8m) has been recorded for the year reflecting
the increase in taxable profits for the year.
Deferred tax assets relating to unused tax losses have been
recognised to the extent that it is probable that taxable
profits will be available against which the asset can be
utilised. The Group now has £28.3m (2015: £31.0m) of tax
losses, of which £20.1m (2015: £25.8m) is recognised as a
deferred asset, which can be carried forward indefinitely.
£4.0m
£3.5m
2013
£4.8m
2014
£8.1m
2015
£10.2m
2016
The tax charge attributable to discontinued operations was
£0.0m (2015: £nil).
* Gleeson Homes operating profit in 2015 includes £2.7m from the
sale of surplus land. There were no land sales in 2016.
The net deferred tax asset recorded within the Statement of
Financial Position totals £4.6m (2015: £5.7m).
Discontinued operations incurred a loss of £0.3m during the
year (2015: loss £0.2m). This related to the costs of Gleeson
Construction Services Limited, whose only activity is limited
to resolving contractual claims from the businesses that
were sold in 2005 and 2006.
Earnings per share
Reported basic earnings per share increased by 86.8% to
42.6p (2015: 22.8p). The normalised basic earnings per
share improved by 24.6% to 42.6p (2015: 34.2p).
Provision for diminution in value of
investment
There were no provisions made during the year. During 2015
the Group fully provided for the £4.9m carrying value of its
investment in GB Group Holdings Ltd.
Financing
Financial income of £0.5m (2015: £0.5m) consists primarily
of the unwinding of discounts on deferred receipts on land
sales. Interest earned on unwinding of deferred receipts
was marginally higher than the prior year as a result of a
higher level of deferred receipts outstanding.
Financial expenses of £0.4m (2015: £0.4m) consist of
interest payable on bank loans and overdrafts, bank charges
and interest and unwinding of discounts relating to deferred
payments on land purchases.
Profit for the year
The profit for the year attributable to equity holders was
£23.0m (2015: £12.2m).
Dividend
Reflecting the financial strength of the Company as well
as our confidence in the short term outlook, the Board
has proposed a final dividend of 10.0 pence per share
(2015: 7.3 pence per share). Combined with the interim
dividend, the dividend for the full year totals 14.5 pence
per share being an increase of 45.0% on the prior year
(2015: 10.0 pence per share). The Board aims to maintain
dividend cover between two and three times for the
foreseeable future.
TOTAL DIVIDEND (pence)
14.5p
10.0p
6.0p
2.5p
2013
2014
2015
2016
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Financial Review (continued)
Statement of financial position
During the year to 30 June 2016, shareholders’ funds
increased by £16.4m to £152.9m (2015: £136.5m).
Net assets per share increased to 283 pence, an increase
of 11.4% year on year (2015: 254 pence).
In the year, non-current assets decreased by £7.1m to
£19.9m (2015: £27.0m). The main reasons for the change
are the decrease in trade and other receivables of
£6.1m and the £1.1m decrease in the deferred tax asset.
Current assets increased by £19.2m to £160.8m (2015:
£141.6m), with inventories increasing by £6.0m to
£114.2m, trade and other receivables increasing by £5.8m to
£23.3m and cash balances increasing by £7.4m to £23.2m.
Total liabilities decreased by £4.4m to £27.7m
(2015: £32.1m). This was mainly due to trade and other
payables of £26.9m (2015: £31.8m) being £4.9m lower.
Cash flow
The Group generated £7.4m (2015: £2.1m) of cash in the
year, resulting in a net cash balance at 30 June 2016 of
£23.2m (2015: £15.8m).
Operating cash flows before working capital movements,
generated £29.1m (2015: £17.9m). Investment in working
capital of £11.6m (2015: £14.3m excluding impairment
of investment) resulted in cash generated from operating
activities of £17.5m (2015: £8.4m). Tax and interest
payments amounted to £3.7m (2015: £0.5m). Cash
generated from investing activities totalled £0.0m
(2015: £0.1m). Net cash out-flows from financing
activities totalled £6.4m (2015: £6.0m), including £6.4m
(2015: £4.1m) on dividend payments.
CASH BALANCE (£m)
£23.2m
Treasury risk management
The Group’s cash balances are centrally pooled and
invested, ensuring the best available returns are achieved
consistent with retaining sufficient liquidity for the Group’s
operations. The Group deposits funds only with financial
institutions which have a minimum credit rating of A.
As the Group operates wholly within the UK, there is no
requirement for currency risk management.
Bank facilities
The Group extended its £20.0m committed working capital
facility with Lloyds Bank plc for a further three years to
March 2019 on significantly improved terms. The extended
facility includes an un-committed accordion option that
could increase the facility size to £40.0m. The facility
provides the Group with additional flexibility and
capacity for growth. The facility was undrawn at the
balance sheet date.
Pension
The Group contributes to a defined contribution pension
scheme. A charge of £0.5m (2015: £0.5m) was recorded in
the Income Statement for pension contributions. The Group
has no exposure to defined benefit pension plans.
Jolyon Harrison
Chief Executive Officer
23 September 2016
£15.8m
£13.7m
Stefan Allanson
Chief Financial Officer
23 September 2016
£9.9m
2013
2014
2015
2016
16
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Thanks to the Help to Buy scheme and Gleeson’s
affordable prices Alison & Michael were able to buy
a brand new home and have their dream wedding in
the same year.
17
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Operating Risk Statement
In common with other organisations, the Group faces risks that may affect its performance. The Group has established and
operates a system of internal control and risk management procedures, in order to identify, control and monitor the risks at
various levels within the organisation. These risks include but are not limited to the following:
Risk
Description of risk
Mitigation
Economic environment
The impact of economic fragility and
Government austerity measures.
The risk appears not to have changed as
a result of the Brexit referendum result.
Demand for low cost homes remains
strong.
Some housebuilders are trying to
renegotiate terms for purchase of land.
Mortgage availability
The limited availability of mortgages for
first time buyers.
The risk has not changed during the year.
Land
An inability to source sufficient land at
an acceptable cost to meet the Group’s
business needs.
The risk has not changed. Land in the
North of England remains available
at relatively low cost. The Group has
strengthened its land team.
Any uncertainty in the wider
economy, including Government
austerity measures, could affect
buyer confidence and the demand
for new houses. This could have a
negative impact on revenues, profits,
cash generation and the carrying
value of the Group’s assets.
• Sites are selected to meet the needs of the local
community.
• Prices and incentives are regularly reviewed.
• Lead indicators of the housing market, such as
visitors to sites and reservation rates are closely
monitored.
• A cautious approach to debt funding is maintained.
• Gleeson Strategic Land sites are actively marketed
to a wide and varied range of housebuilders.
• Gleeson Homes provides a range of customer
assistance packages.
• We continually innovate to find additional ways to
assist customers to buy a home.
• We work with key lenders to ensure products are
appropriate.
• We have a clearly defined strategy and geographic
focus.
• There is a formal appraisal process and rigorous
adherence to rates of return.
The availability of mortgage finance,
particularly the deposit requirements
for first time buyers, is crucial to
customer demand. Restrictions on
mortgages granted could reduce
demand for new homes and impact
the Group’s revenues and profits.
Gleeson Homes needs to acquire
consented land at appropriate prices
and in appropriate areas in the North
of England in order to construct and
sell homes to deliver profit.
Gleeson Strategic Land needs to
acquire control of land in the South
of England so that it can promote
it through the planning system and
subsequently sell it in order to
deliver profit.
Planning policy and regulations
The potentially damaging uncertainties
in the planning regime may affect the
Group’s ability to secure planning consents
on a timely basis.
The risk has not changed during the year.
Increased complexity in some
aspects of the planning process may
slow down, or increase the cost of,
the delivery of consented land for
development or sale and so impact on
the Group’s revenues and profits.
People
An inability to attract, develop or retain
good people.
The risk has not changed during the year.
The loss of key staff or the failure to
attract, develop and retain people
with the right skills may have a
detrimental impact on the business.
• We have a very high level of in-house expertise
devoted to monitoring and complying with planning
regulations and to achieving implementable
planning consents.
• We consult with central government, parliament
and local authorities, both directly and via industry
bodies, in order to understand proposed changes to
regulations and to highlight potential issues.
• We have programmes that appropriately reward the
achievement of performance targets.
• The Group encourages employee share ownership.
• Our apprenticeship schemes enable us to identify
and secure the loyalty of talented individuals at an
early age.
• We perform regular performance and development
reviews.
• We monitor staff turnover and benchmark
remuneration against competitors.
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Risk
Description of risk
Mitigation
Availability of raw materials and
subcontractors
An inability to secure materials and
skilled labour on a timely basis at
suitable prices.
The risk has not changed during the year.
Shortages or increased cost of
materials or skilled labour, the failure
of key suppliers, or the inability to
secure supplies upon appropriate
credit terms could increase costs and
delay construction.
Health & safety
A failure to prevent unsafe practices
within our construction activities, causing
injury or death.
The risk has not changed during the year.
Health and safety breaches can
result in injuries to employees,
subcontractors and site visitors,
delays in construction, additional
cost, reputational damage, criminal
prosecution and civil litigation.
Latent defects
Financial losses may arise from latent
defects that may arise on completed
projects during the liability period.
The risk has not changed during the year.
Corporate liquidity
The Group needs appropriate banking
facilities for its short term liquidity and
long term funding needs.
The risk has not changed during the
year. The Group’s committed borrowing
facilities, albeit unused, have been
extended for a further three years.
The Group may be exposed to
latent defects which occur during
the liability period on completed
construction contracts that have not
been transferred to the purchaser of
the relevant construction business.
Although subcontractors will normally
resolve such defects, the Group will
become liable if the subcontractor
is no longer trading, potentially
resulting in additional cost.
The Group may be unable to meet
short term liabilities as a result of
failure to manage liquidity.
Lack of liquidity may also limit the
Group’s ability to take advantage
of business opportunities as they
become available and consequently
a possible impediment to future
growth.
• The Group has multiple suppliers for both labour
contracts and material supplies.
• The Group seeks to partner with the supply chain
and has systems in place to monitor and control
their performance.
• Where appropriate, group purchasing arrangements
are in place to ensure the supply of materials at
competitive prices.
• Our documented policies and procedures are
regularly reviewed and modified in order to ensure
continuous improvement.
• Dedicated Health & Safety personnel ensure
implementation and adherence to these policies and
procedures.
• Performance is reviewed both by local management
and the main Board.
• We have experienced personnel, dedicated to
dealing with such claims.
• Insurance policies are in place to minimise Group
liabilities, wherever possible.
• The provisions relating to completed contracts are
reviewed on a regular basis.
• The Company has segregated the continuing
businesses of the Group from the Group’s legacy
building contracting and engineering businesses.
• The Group maintains strong financial disciplines.
• Cash generation is controlled by robust budgeting,
forecasting and cash management disciplines.
• Regular contact with investors and lenders to
ensure adequate bank facilities are in place with
appropriate covenants and headroom.
Financial irregularity
The Group could suffer loss from
significant fraud or the misrepresentation
of financial results.
The risk has not changed during the year.
Negative publicity could have an
adverse effect on the Group’s
reputation and the Group could
experience lower confidence levels
from customers and suppliers.
• The Group has financial and management controls
designed to segregate duties and minimise
opportunities for fraud. Financial reporting
processes are the subject of rigorous and timely
management reviews.
Credit risk
The Group could suffer loss as a result of
default from customers.
The risk has not changed during the year.
The Group has exposure to
receivables on deferred payment
terms, particularly on certain land
sales.
• Credit risk assessments are performed on all
customers buying land on deferred terms.
• The Group maintains security over the majority of
land sold on deferred terms.
Information technology
Failure of information management
systems or loss of data.
The risk has not changed during the year.
The Group could suffer operational
inefficiencies as a result of a loss of
data or system failure.
• Industry standard systems are managed by a central
IT team with outsourced support.
• Contingency plans are in place and regularly tested.
• The majority of data is held in secure externally
managed servers.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Corporate Social Responsibility Report
Local homes for local people
We continue to transform brownfield sites in challenging areas
into new homes developments. We build properties which get
working class people out of housing poverty and the rent trap
into home ownership and wealth creation.
Our buyers are not property speculators nor are they landlords.
For our buyers, a Gleeson home is a safe and secure place
where they can raise their families, a home which they will
proudly pass on to their children as a legacy.
“
We really wanted to stay
local but were desperate
to move out of our parents’
homes and didn’t fancy
wasting money on rent.
We never thought we could
afford a new home and then
we visited Carlisle Park and
found out about the Help to
Buy scheme. We thought it
would be years before we
were in a position to buy
and now we are the proud
owners of a three bed
semi-detached home.
“
With the average age of home buyers in the UK now at 31, Emily and
Stephen, aged 19 & 22 respectively, never thought they could own a home,
until they visited Gleeson’s Carlisle Park development in South Yorkshire.
20
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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“
We really did think
we were stuck in the
‘rent trap’ forever
so we were surprised
that we could buy a
Gleeson home with
Help to Buy and our
mortgage repayments
were cheaper than
our monthly rent!
“
Bus driver, Lee, and partner Kylie, who works for the Co-op, had resigned
themselves to renting and never thought they would get on the property ladder.
Yet now they are the proud owners of a brand new Gleeson home and are planning
their dream wedding.
Community Matters
Gleeson’s commitment
to working with local
communities met with the
approval of the former
Minister of State for Housing
and Planning, Mr Brandon
Lewis, when he visited the
Grafton Park development in
the Toxteth area of Liverpool.
During his visit Mr Lewis toured
the development and discovered
how Gleeson is helping meet the
Government’s aspiration of home
ownership with over 40% of buyers at
Grafton Park using the Help to Buy
scheme to purchase their new home.
Mr Lewis met with prospective buyer
Emma Careless who explained that
without Help to Buy and Gleeson’s
range of purchasing enabling
schemes she could not afford to
buy her own home.
Former Minister of State for Housing and
Planning visits Grafton Park in Toxteth
Mr Lewis was especially impressed
with Gleeson’s transformation of
the vacant land, which is located
in the heart of an area of Liverpool
infamous for the riots in 1981, into a
development of 132 new homes.
These have proven extremely popular
with local buyers with properties
selling as soon as they are released
for sale.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Corporate Social Responsibility Report (continued)
The Gleeson
Community Sports
Foundation
In early 2016 we reached a
milestone with the sponsorship
of the 50th junior sports team
through the Gleeson Community
Sports Foundation.
Since its inception in 2012 we have provided
sponsorship to local teams, run by community
volunteers who, without this money, would struggle to
offer children the opportunity to practice and learn a
competitive sport in a safe environment.
Burnley
Women &
Girls
Funding from
Gleeson helped
set-up this brand
new all-female
cricket team.
The club offers
local girls
the chance to
participate in a
women’s cricket
league and also
helps team
members develop
socials skills in a
safe and fun
environment.
Moorthorpe & South Elmsall District
Junior FC
When two local football teams were in danger of
disbanding due to financial pressures they joined forces
to create one district team.
The joint team is celebrating success in part thanks to
Gleeson Homes who now sponsor the Under 12s team.
The juniors proudly wore their new Gleeson kit when
they recently won a local challenge cup tournament.
22
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Engagement with local schools
We continue to work with local primary schools
located close to our developments.
Projects include asking pupils to suggest names for new roads on our developments
and tapping into their creativity by getting the school children to design their
‘dream’ bedroom in a shoebox which we then recreate in our showhomes.
When Gleeson started to develop Scarborough’s vacant McCain Football Stadium
into brand new homes we worked with pupils from the local Thomas Hinderwell
Primary School to suggest a name for the new road running through the
development.
After careful
consideration we
chose TJ McNeil’s
suggestion
of Stadium
Lane, which
is only fitting
following the
transformation
of this iconic
local landmark
into a brand new
community.
This year we extended our schools
programme into secondary
education, offering students from
Dukeries Academy Construction
College in Nottinghamshire the
chance to tour our Whinney Park
development and see first-hand
the construction practices they
are studying in the classroom.
Following the site visit the
Academy selected one student
to spend a day with our Health
and Safety Team. During the
mentoring day the student
accompanied a Director on site
visits to get a wider perspective of
the housebuilding industry.
A bedroom fit for a superhero. Designed by
local school boy Archie Miller and recreated in
one of our showhomes at Masefield Park.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Corporate Social Responsibility Report (continued)
Traditional
Neighbourhood
Watch does
not work in our
development
areas which are
often blighted by
higher than average levels of crime and antisocial behaviour.
Residents are reluctant to join a visible and active
Neighbourhood Watch group for fear of reprisals or being
viewed as a ‘busybody’ with links to the local Police.
Gleeson recognised this apathy towards Neighbourhood
Watch, which we view as an outdated scheme, and
addressed the issue by creating our own unique online alert
system called YourWatch.
YourWatch provides our residents with the anonymity
to report their concerns without repercussion via the
YourWatch website. We then share this information and
where necessary, send warnings through instant alerts
straight into their inbox.
The YourWatch scheme goes from strength to strength
with over 1,800 households now subscribed across 48
developments.
YourWatch has helped stop antisocial
behaviour at Rainsborough Park in
West Yorkshire
We receive regular email reports from residents advising
us of various issues on their development from burglary to
antisocial behaviour and even, in one instance, untethered
ponies eating flowers from front gardens.
At Parson Green with the local
community to help keep the residents
of Parson Cross safe.
The Parson Cross area of Sheffield is blighted with
higher than average levels of crime and problems with
antisocial behaviour and gang activity. Our Parson
Green development is now a pivotal part of the Parson
Green community and the information taken from our
YourWatch scheme has become invaluable in our work
with the local Police and Parson Cross Forum to cut
crime in the area. YourWatch has succeeded in an area
where traditional Neighbourhood Watch failed.
We investigate every report, where necessary passing
information to the local Police and Authorities and issue our
own alerts via email to all local residents asking them to be
vigilant and report any further disturbances to us.
We have recently expanded the scheme and now encourage
existing residents who live close to our sites to sign up to
YourWatch. The expansion of the scheme into the local
area is just another way we are working with local people to
create safer communities.
When a resident from the Rainsborough Park
development sent us a YourWatch Incident Report about
local youths irresponsibly riding motorbikes around
the development roads and neighbouring bridleways
we immediately sent out a YourWatch Report to other
residents advising them to be vigilant and report any
other problems. Thanks to our intervention local PCSOs
now carry out regular patrols in the area and no further
activity has been reported.
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The Gleeson
Apprenticeship
Scheme
Since 2010 the Gleeson
Apprenticeship Scheme has trained
over 60 young people, giving them
invaluable site experience in the
bricklaying and joinery trades, whilst
allowing them time to study for an
NVQ at a local college.
In 2015 the scheme
was expanded
to include office
based roles in
Construction
Operations
and in August
2016 a further
Apprenticeship in
Quantity Surveying was introduced with new roles created
at each of our six regional offices.
Greg Lyons was one of the first apprentices to join the
Gleeson scheme back in 2010, completing his two year
NVQ in Joinery at college whilst practising his skills on new
homes at the Grove Village development in Manchester.
Greg showed clear promise throughout his apprenticeship
and on completion of his studies was promoted to Trainee
Assistant Site
Manager on the
development.
Just 5 years after
joining the Gleeson
team Greg is now
the Assistant Site
Manager at Grove
Village, supervising
the completion
of the last homes
on this vast, inner
city regeneration
scheme comprising
of 881 new
Gleeson homes.
The Gleeson Community
Challenge
In 2015 Gleeson launched its inaugural Community
Challenge Makeover in South Yorkshire. Local charities
and non-profit organisations were invited to apply for
a makeover of their facilities, worth £10,000, with
all the works carried out by Gleeson’s construction
team. Gleeson volunteers and subcontractors kindly
contributed their time and services to the project.
The winner was Croft House Settlement & Community
Centre located in an old church building in the
heart of Sheffield. The centre was in need of major
renovation. As part of the Makeover, Gleeson was able
to create a new reception area, provide a brand new
kitchen and refurbish the toilets.
One year later Croft House has become increasingly
popular thanks to the Makeover.
Roger Steele
from Croft
House Council
of Management
said, “The
refurbishment
has been a major
hit with all our
regular groups
and visitors
and continues to attract many positive comments.
Over the past 12 months we have received numerous
enquiries from potential new users who have seen the
refurbishment and we look forward to welcoming new
groups to use the centre’s facilities.
Gleeson’s Makeover certainly inspired us to carry
out further work in the centre. All the ground
floor rooms have now been re-decorated and we are
currently involved in repairs and re-decoration of a
major staircase area.”
In late 2016 we will be launching our
second Community Challenge and will
soon start inviting local charities and
organisations in the Teesside region to
apply for a makeover, this time worth
£20,000.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Corporate Social Responsibility Report (continued)
Health and safety
Health and safety is of paramount importance to the Group
and is considered to be a key risk.
There have been no prohibition or improvement notices
issued to the Group during the year. There was one
reportable injury in the year and no dangerous occurrences
under the Reporting of Injuries, Diseases and Dangerous
Occurrences Regulations (“RIDDOR”). In the previous three
years the Group reported one, two and zero injuries per
year respectively under RIDDOR.
The overall Accident Incidence Rate (“AIR”) was 117 in spite
of a further sizable increase in construction activity and is
below the housebuilding industry average of 368 injuries per
100,000 employees, as published by the HBF (Home Builders
Federation) and the Health & Safety Executive. The AIR is an
industry-wide indicator of health and safety performance.
Environment management systems
The Group’s business units each have an environmental
management system which controls how environmental
performance is managed. At the operational level, the
environmental management system is contained within our
construction planning.
The Group’s environmental strategy is focused on:
• minimisation of environmental risk and maximisation of
environmental opportunity; and
• ensuring knowledge and understanding is at a level
where all employees are aware of the environmental
responsibilities involved in their job.
Waste management: minimisation
and recycling
Site waste management plans are put in place at the start
of each project. Suitable recovery or disposal arrangements
are made for all waste. Arrangements are identified for
dealing with all waste in line with Environment Agency
recommendations.
Timber policy
The Group has a timber purchasing policy which requires
that all timber provided or used in the manufacture of its
products must be obtained from a certified sustainable
source. The Group complied with this policy throughout
the year.
Greenhouse gas reporting
Our greenhouse gas emissions for the year ended 30 June
2016 were calculated in accordance with the financial
control approach under the UK Government’s GHG Protocol
Corporate Accounting and Reporting Standard (revised
edition) and emission factors for Company Reporting
2014. The calculation incorporates the six Kyoto gasses
including carbon dioxide, methane, nitrous oxide and hydro
fluorocarbons and reports them in terms of carbon dioxide
equivalents (CO2e).
CO2 emissions
Scope 1: Emissions from
combustion of fuel
Scope 2: Electricity, heat,
steam and cooling purchased
for own use
Total emissions
Emissions per £m revenue
Tonnes CO2e
2016
Tonnes CO2e
2015
1,562
1,362
524
2,086
14.68
336
1,698
14.46
Our people
It is the Group’s policy to ensure that it provides a safe,
professional and stable working environment, that all
employees are afforded equal opportunities and are free
from unlawful discrimination regardless of their age, sex,
sexual orientation, colour, race, religion or ethnic origin and
that disabled persons are not disadvantaged.
At 30 June 2016 the Group employed the following number
of people:
Female
Male
Num
%
Num
%
Total
Number
Executive team
Senior management
0
2
0%
2 100%
15%
11
85%
Other employees
96
30%
222
70%
Total
98
29%
235
71%
2
13
318
333
The Group believes its employees are fundamental to
its success and has continued to invest in them through
training and development programmes. The Group actively
encourages all of its employees to be fully engaged in the
identification of their own training needs in order to achieve
their full potential and to meet the requirements of the
business.
26
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Individual employee performance is regularly reviewed using
the Group’s Performance Development Review process and
objectives and targets set for personal development.
We have continued to increase the number of apprentices
within the Group to support the Group’s growth strategy.
By the end of the financial year there were 30 apprentices
employed by the Group (2015: 25). In September 2016
19 apprentices will be commencing their first year of the
apprenticeship programme, 9 commencing in their second
year and 4 commencing in their third year.
We anticipate that further development of the
apprenticeship programme will continue over future years.
All of the Group’s site based employees are accredited
under the Construction Skills Certification Scheme.
Charitable donations
Charitable donations in 2016 totalled £2,000
(2015: £20,500).
STRATEGIC REPORT APPROVAL STATEMENT
The Strategic Report, contained in pages 4 to 27 has
been approved by the Board of Directors and is signed
on its behalf by
Jolyon Harrison
Chief Executive Officer
23 September 2016
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
27
Corporate Governance
29 Chairman’s Introduction
30 Board of Directors
32 Corporate Governance Statement
39 Directors’ Report
28
MJ Gleeson Group plc: Report and Accounts for the year ended 30 June 2015
Malvins Walk, Blyth
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Chairman’s Introduction
I am pleased to have the opportunity to introduce this report which describes our corporate governance arrangements
during the year ended 30 June 2016 and explains how these arrangements have worked for the benefit of the Group and its
shareholders.
As a premium listed company on the London Stock Exchange, the Group is subject to the UK Corporate Governance Code.
The Board believes that compliance with this Code assists it to provide the Group with ethical and effective leadership.
As Chairman, I am responsible for the leadership of the Board and for ensuring that it fulfils its responsibilities to all of the
Group’s stakeholders.
The three main requirements of the Board’s successful operation are:
• the maintenance of an appropriate balance among Board members of relevant skills and experience;
• the timely and regular provision to all Board members of the information that they need to monitor the performance of
the Group’s divisions and to understand the conditions in which they are operating; and
• the presence of non-executive directors with sufficient expertise and independence to challenge the executive directors
constructively on operational issues and to contribute to the development of corporate strategy.
Appointments to the Board are always made on merit against objective criteria and the Board strongly supports the principle
of boardroom diversity. The Board, its Committees and individual Directors are subject to annual performance evaluation
and, although this is not a requirement of the Code, all Directors are subject to annual re-election by shareholders.
The Board considers that this Annual Report is fair, balanced and understandable.
The remainder of this report contains the narrative reporting variously required by the Code, the Listing Rules and the
Disclosure Guidance and Transparency Rules.
Dermot Gleeson
Chairman
23 September 2016
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
29
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Board of Directors
Jolyon Harrison
Chief Executive Officer
and Managing Director,
Gleeson Homes
2
1
Dermot Gleeson
Chairman
3
Stefan Allanson
Chief Financial Officer and
Company Secretary
4
Ross Ancell
Non-Executive Director
5
Colin Dearlove
Non-Executive Director
Christopher Mills
Non-Executive Director
6
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5 Colin Dearlove
BA, FCMA, CGMA
Non-Executive Director
Appointed to the Board in
December 2007. Colin was at
Barratt Developments PLC from
1981 to 2006 where he held a
number of senior finance positions
with the most recent being Group
Finance Director, from 1992 until
his retirement in 2006. He is
the Senior Independent Director,
Chairman of the Audit Committee
and member of the Remuneration
and Nomination Committees.
6 Christopher Mills
Non-Executive Director
Appointed to the Board in January
2009. Founder of Harwood Capital
Management Group and formerly
Chief Investment Officer of
J O Hambro Capital Management
Limited from 1993 to 2011. He is
also Chief Executive and Investment
Manager of North Atlantic Smaller
Companies Investment Trust PLC,
a UK listed investment trust.
Christopher is a director of several
publicly quoted companies,
including Catalyst Media Group plc,
Bioquell plc and Cyprotex plc.
1 Dermot Gleeson
3 Stefan Allanson
ACMA, FCT
Chief Financial Officer and
Company Secretary (from
July 2015)
Appointed to the Board in July
2015. Stefan joined the Group
in June 2015 as Chief Financial
Officer designate from Keepmoat
Limited where he held the Deputy
Chief Financial Officer role. Stefan
qualified as an accountant in 1994,
following which he held senior
finance roles at Honda Motor Co
Limited, BTP plc, TheSkillsMarket
Limited, The Vita Group Limited
and Tianhe Chemicals.
4 Ross Ancell
ACA, (NZ)
Non-Executive Director
Appointed to the Board in October
2006. Ross is Chairman of Churngold
Construction Holdings Limited and
Independent Non-Executive Director
of Galaxy Entertainment Group
Limited (listed in Hong Kong).
He is Chairman of the Remuneration
Committee and a member of the
Audit and Nomination Committees.
MA (Cantab)
Chairman
Joined the Board in 1975.
Appointed Chief Executive in 1988
and Chairman in 1994. Relinquished
the post of Chief Executive in
1998. Previously employed in
the Conservative Party Research
Department, the European
Commission and Midland Bank
International Limited. Formerly, a
Trustee of the British Broadcasting
Corporation, Chairman of the
Major Contractors Group, a Board
Member of the Housing Corporation,
a Director of the Construction
Industry Training Board and a
Trustee of the Institute of Cancer
Research. He is Chairman of the
Nomination Committee.
2 Jolyon Harrison
FCIOB, FIoD, FCMI
Chief Executive Officer and
Managing Director, Gleeson Homes
Appointed to the Board in July 2010
and appointed Chief Executive
Officer on 1 July 2012. Jolyon
joined the Group in November 2009
as Managing Director of Gleeson
Homes. He has nearly 50 years of
housebuilding experience, most
recently as founder and Chairman
of Pelham Construction/North
Country Homes Group and prior
to that as Managing Director of
Shepherd Homes and Chairman of
York Housing Association. Currently
Chairman of JDP Rooflines Limited,
MSP Technologies Limited and
the Yorkshire region of the Home
Builders Federation. Formerly a
member of the North East Housing
Board and a Council member of the
National House Building Council.
He is the Board member responsible
for health and safety matters.
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31
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Corporate Governance Statement
The Board remains committed to achieving and maintaining a high standard
of corporate governance.
During the period under review, the Company, as a premium
listed company, was subject to the September 2014 edition
of the UK Corporate Governance Code issued by the
Financial Reporting Council (FRC). The Code recognises that
not all of its provisions are necessarily relevant to smaller
listed companies and the Code states that departures
from its provisions should not be automatically treated as
breaches of the Code. The Directors believe that the Code is
correctly applied as and where relevant to the Company and
are satisfied that in areas of departure from the Code the
departure is for good reason.
throughout the year to 30 June 2016 with the exception
of Mr Stefan Allanson who was appointed Chief Financial
Officer and Company Secretary in July 2015 following the
resignation of Mr Alan Martin who resigned as Chief Financial
Officer and Company Secretary in July 2015. The Directors’
biographies are set out on page 31.
All of the Directors have access to the advice and services
of the Company Secretary and may, in furtherance of their
duties, take independent advice, at the Company’s expense.
Training is arranged, as required.
Further explanations of how the main principles and the
supporting principles have been applied are set out on
page 36.
On joining the Board, arrangements are made for all
new Directors to meet their colleagues and other senior
management, to ensure an adequate induction to the Group.
Board of Directors
The Board is responsible to shareholders for the success
of the Group. Its role is to set the strategic and financial
framework within which the Group operates, to monitor
and review the performance of each of the divisions and
to ensure that the risks faced by the Group are effectively
managed. To facilitate this, the Board and its committees
are provided with relevant and timely information in
advance of all meetings and when otherwise required.
Due to the size and structure of the Group, all significant
decisions are taken at Board level. There is a formal
schedule of matters that are reserved for a decision of the
Board or its committees; these include the approval of:
• strategy and financial policy;
• banking arrangements and any changes to them;
• interim and annual financial statements;
• risk management and internal control policy;
• major capital expenditure;
• acquisition of land;
• acquisitions and disposals;
• Board structure and composition;
• terms of reference of the Board’s sub-committees;
• entering into or amending pension arrangements;
• approval of contractual arrangements which fall outside
authority delegated to Executive Directors;
• dividend policy; and
• pledging security over assets and providing parent
company guarantees.
On resignation, any concerns raised by an outgoing Director
are circulated by the Chairman to the remaining members of
the Board.
Directors’ and Officers’ Insurance is procured through the
Company’s insurance brokers, Arthur J Gallagher International.
The terms and conditions are reviewed annually.
The Board continues to support the Malpractice Reporting
Policy. The Policy has been communicated internally and is
available for review on the website.
Conflicts of interest
Following the introduction of s.175 of the Companies
Act 2006 on 1 October 2008 and the authority given by
shareholders at the 2008 AGM to the Directors to authorise
conflicts of interest, the Board has procedures in place to
deal with conflicts of interest. Under s.175, all Directors
are under a duty to consider their positions fully at all
times. They must advise the Chairman immediately or,
if the Chairman is conflicted, he must advise the Senior
Independent Director. If a conflict is identified, permission
or refusal to authorise a conflict is given by the non-
conflicted Directors subject to the appropriate quorum
requirement being met without counting the conflicted
Director. The Board may vary or terminate the authorisation
should the facts change or should the Board feel it is no
longer appropriate for such authorisation to be in place.
All these matters were reviewed by the Board during the year.
At the date of this report, the Board comprises six Directors,
four of whom are Non-Executive. All Directors served
A register of authorisations is maintained by the Company
Secretary which includes date of authorisation, expiry and
comments on any special circumstances which might include
the requirement of a conflicted Director to absent himself
32
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from Board discussions or be precluded from receiving
Board papers.
Board effectiveness
The roles of the Chairman, Dermot Gleeson, and the Chief
Executive Officer, Jolyon Harrison, are clearly defined
and they act in accordance with the main and supporting
principles of the Code.
The Chairman is responsible for leadership of the Board
and ensuring its effectiveness. This role includes ensuring
that the Directors receive accurate, timely and clear
information; facilitating the contribution of the Non-
Executive Directors; and ensuring constructive relations
between the Executive and Non-Executive Directors.
The Chairman is in regular contact with the Chief Executive
Officer to discuss current matters and has visited Group
operations outside the Board meeting calendar to meet
divisional directors and managers.
Board balance and independence
During the year, Ross Ancell and Colin Dearlove were the
Board’s independent Non-Executive Directors and fulfilled
the requirement that a “smaller company”, as defined by
the Code, should have two such directors. Colin Dearlove is
the Senior Independent Non-Executive Director.
Ross Ancell will have completed ten years of service
and Colin Dearlove nine years of service on the Board at
the date of the 2016 AGM in December 2016. Both Ross
Ancell and Colin Dearlove have provided assurances to
the Board of their continued independence and that there
are no circumstances which are likely to affect, or could
appear to affect, their judgement. The Board greatly
values both Ross Ancell’s and Colin Dearlove’s expertise
and understanding of the Group’s operations and strategy
and is wholly confident that they will continue to behave
independently in character and judgement in the interests
of all our shareholders. We have consulted our two largest
shareholders and both are supportive of the Board’s
assessment that Ross Ancell and Colin Dearlove should
continue to be regarded as independent directors.
Neither Dermot Gleeson, Chairman, who has previously been
Executive Chairman and, prior to that, has held the post of
Chairman and Managing Director, nor Christopher Mills, who
represents a major shareholder, Harwood Capital LLP, are
considered to be “independent” within the definition of that
term contained in the Code.
A primary duty within the Nomination Committee’s Terms
of Reference is that candidates for appointment to the
Board will be based upon merit. The Board recognises
the benefits of diversity and we consider that diversity
includes, but is not limited to, personal attributes, gender,
ethnicity, age, disability and religious beliefs. Our aim is to
promote equality, respect and understanding and to avoid
discrimination. Whilst we value the recommendation of
the Davies Report, we do not have a specific objective for
the number of female Directors. We do not currently have
any female main Board Directors and we are committed
to ensuring that appointments made to the Board, and at
senior management level, are made on merit.
The Nomination Committee will ensure that it only uses
executive search firms which have signed up to the
voluntary Code of Conduct addressing gender diversity and
best practice, that females are given the same consideration
and opportunity as male applicants and that gender diversity
is considered specifically when drawing up a list of potential
candidates.
Board and Committee meetings
During the year, the Board met on seven occasions. Normally
six Board meetings are held each year. However the Board
meeting scheduled for June 2015 was moved for practical
convenience to 1 July 2015. Board packs, which include a
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
33
Stefan Allanson, CFO and
Jolyon Harrison, CEO
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Corporate Governance Statement (continued)
formal agenda, are circulated in advance of such meetings.
Attendance by individual Directors at scheduled Board
meetings (including the 1 July meeting referred to above)
and by members at Committee meetings is shown in
Figure 1 below.
The main purpose of these meetings is to permit the Board
to receive regular reports on the performance of the Group
and address a wide range of key issues, including health &
safety, operational performance, risk management and cor-
porate strategy. Additional Board meetings may be convened
from time to time in response to specific circumstances.
During the course of the year, the Non-Executive Directors
met without the Executive Directors present, both with and
without the Chairman being present.
The minutes of all meetings of the Board and of each of its
Committees are recorded by the Company Secretary. As well
as recording the decisions taken, the minutes reflect any
queries raised by the Directors and record any unresolved
concerns.
Board evaluation
During the year, under the leadership of the Chairman, the
Board undertook an evaluation of its own performance.
This was based on completion of a detailed questionnaire
and individual discussions between the Chairman and
the Directors. Being a smaller listed company, it was not
considered necessary to have this year’s Board evaluation
externally facilitated. Similarly, the Chairman of each of the
Audit, Remuneration and Nomination Committees conducted
a performance review of each Board Committee. Colin
Dearlove, as the Senior Independent Director, conducted an
evaluation of the Chairman’s performance in conjunction
with his Non-Executive Director colleagues and with input
from the other Executive Directors. The outcome and
conclusions reached from the conduct of these evaluations
were discussed by the Board at its September Board
Meeting. It was concluded that the Board, its Committees
and the Chairman continued to perform effectively.
Risk management and internal control
The Directors acknowledge their responsibility for the
Group’s risk management procedures and systems of
internal controls and for reviewing their effectiveness. It
should be recognised that all such systems and procedures
are designed to manage rather than eliminate the risk of
failure to achieve business objectives, and can only provide
reasonable, rather than absolute, assurance against material
misstatement or loss. Risk management and internal control
within the Group’s operating units is delegated to the
management responsible for the operating unit, with the
Board retaining ultimate responsibility.
During the year being reported, and in making this
statement, the Company’s Board of Directors carried out a
robust assessment of the principal risks and uncertainties
facing the Group, including those that would threaten the
Group’s business model, future performance, solvency
and/or liquidity.
The Board is of the view that there is an adequate ongoing
process for identifying, evaluating and managing the Group’s
significant risks, which satisfies the internal control guidance
for Directors detailed in provision C.2.1 of the Code. This
FIGURE 1: ATTENDANCE BY INDIVIDUAL DIRECTORS AT SCHEDULED BOARD MEETINGS
Number of scheduled meetings
Attendance
Dermot Gleeson
Ross Ancell
Colin Dearlove
Christopher Mills
Jolyon Harrison
Stefan Allanson
Alan Martin l
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
7
6
7
7
6
7
7 o
1
5
n
5
5
n
5 v
5 v
1 v
2
n
2
2
n
2 v
2 v
-
2
2
2
2
n
2 v
2 v
-
n Not a member of this Committee
v Whilst not a member of this Committee, the Director was in attendance at all meetings
o 1 as an attendee prior to formally joining the Board
l Resigned as Chief Financial Officer and Company Secretary in July 2015
34
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process takes the form of a formal Risk Management Policy
supported by financial and management controls that are
operated Group-wide and which are subject to both internal
review by the Chief Financial Officer and external review as
part of the statutory audit carried out by the Auditors.
The Group’s system of internal control includes the
following processes:
• The Board and management committees meet regularly
to monitor performance against key performance
indicators which include cash management and financial
and operational measures. A variety of financial and non-
financial reports are produced to facilitate this review
process.
• The Board has established defined lines of authority
to ensure that significant decisions are taken at an
appropriate level.
• The Group employs individuals of appropriate calibre
and provides any training that is necessary to enable
them to perform their role effectively. Key objectives
and opportunities for improvement are identified through
annual performance and development reviews.
• Each business function has defined procedures and
controls to identify and minimise business, operational
and financial risks. These procedures include segregation
of duties, provision of regular performance information
and exception reports, approval procedures for key
transactions and the maintenance of proper records.
Compliance with these procedures and controls is
certified annually by management.
• The Group’s programme of insurance covers the major
risks to the Group’s assets and business and is reviewed
annually.
• The Chief Financial Officer has responsibility for the
internal audit process and reports to the Audit Committee
on such matters.
• Procedures are in place that require operating unit
management to refer all investment and divestment
decisions that exceed prescribed limits in the first
instance to the Group Capital Committee and thereafter
to the Board, for approval.
Regular reviews are undertaken in order to identify any
changes in procedure that may be required in the light of
changing circumstances.
The Operating Risk Statement on pages 18 and 19 sets out
details of various risks that the business may face and how
it mitigates them.
The overall Risk Management and Internal Control process
is reviewed by both the Audit Committee and the Board.
The Board also confirms that the formal risk management
process was reviewed during the year and continued to
operate up to the date of approval of these financial
statements.
Whistleblowing arrangements
The Group and Company has operated a ‘whistleblowing’
arrangement throughout the year whereby all employees
of the Group are able, via an independent external third
party, to confidentially report any malpractice or matters
of concern they have regarding the actions of employees,
management and Directors and any breaches of the
Company’s Anti-Bribery and Corruption Policy.
Anti-bribery and corruption policy
The Group and Company values its long-standing reputation
for ethical behaviour and integrity. Conducting its business
with a zero tolerance approach to all forms of corruption is
central to these values, the Group’s image and reputation.
The Company policy sets out the standards expected of all
Group employees in relation to anti-bribery and corruption
and the Board has overall responsibility for ensuring this
policy complies with the Group’s legal and ethical obligations
and that everyone in our organisation complies with it.
This policy is also relevant for third parties who perform
services for or on behalf of the Group. The Group expects
those persons to adhere to this policy or have in place
equivalent policies and procedures to combat bribery and
corruption.
Shareholder relations
There is dialogue with institutional shareholders,
including presentations following the publication of the
Interim and Final Results and, as appropriate, at other times
during the year. Feedback from these meetings is provided
to the Board.
The Board also welcomes the interest of private investors
and believes that, in addition to the Annual Report and
the Company’s website, the AGM is an ideal forum at
which to communicate with investors and encourage their
participation. At the AGM, the Chairman, together with
the Chairmen of the Audit, Remuneration and Nomination
Committees, will be available to answer any relevant
questions.
For investor relations the Company uses the MJ Gleeson
Group section of its website, www.mjgleeson.com, to
publish statutory documents and communications to
shareholders, such as the Annual Report and Financial
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Corporate Governance Statement (continued)
Statements, and the Half-yearly Report, as its default
method of publication. The website is designed to be a
communication tool for present and potential investors and
includes all London Stock Exchange announcements and
press releases over the past twelve months and also links to
the websites of the Group’s divisions.
Compliance statement
The Company has complied with the vast majority of
the provisions of the September 2014 edition of the UK
Corporate Governance Code applicable to all premium listed
companies. The following provisions are those where the
Company is not strictly in compliance with the Code.
For the reasons stated the Directors believe that the
Company’s stance is justified in this respect.
A.3.1, B.1.1: Dermot Gleeson, Chairman, has previously
been Executive Chairman and, prior to that, has held the
post of Chairman and Managing Director. The Board has
considered the guidance set out in the Code and believes
that it is in the Company’s best interests that Dermot
Gleeson be retained as Chairman.
B.1.1: Ross Ancell will have completed ten years of service
and Colin Dearlove nine years of service on the Board at
the date of the 2016 AGM in December 2016. Both Ross
Ancell and Colin Dearlove have provided assurances to
the Board of their continued independence and that there
are no circumstances which are likely to affect, or could
appear to affect, their judgement. The Board greatly
values both Ross Ancell’s and Colin Dearlove’s expertise
and understanding of the Group’s operations and strategy
and is wholly confident that they will continue to behave
independently in character and judgement in the interests
of all our shareholders. We have consulted our two largest
shareholders and both are supportive of the Board’s
assessment that Ross Ancell and Colin Dearlove should
continue to be regarded as independent directors.
A.4.2, B.6.3: The performance of the Chairman is appraised
by both the Non-Executive and Executive Directors.
As MJ Gleeson plc is a smaller listed company, it is felt that
this is the most appropriate approach.
Nomination Committee
The Nomination Committee (“the Committee”) is a Board
Committee consisting entirely of Non-Executive Directors.
The members of the Committee are Dermot Gleeson
(Chairman), Ross Ancell and Colin Dearlove.
The Committee met twice during the year to 30 June 2016.
Attendance at this meeting by the Committee members is
shown in the table on page 34.
The principal responsibility of the Committee is to consider
succession planning and appropriate appointments to the
Board and to senior management, so as to maintain an
appropriate balance of skills, knowledge and experience
within the Company. The Committee’s formal terms of
reference, which are reviewed annually, are available on the
website and require it to:
• regularly review the structure, size and composition of
the Board and to make recommendations regarding any
adjustments that are considered to be necessary;
• identify and nominate for consideration candidates for
any Board vacancies that may arise;
• put in place plans for succession, in particular to the
Chairman and Chief Executive Officer; and
• make recommendations regarding the continued service
(or not) of the Executive and Non-Executive Directors.
All Board appointments and re-appointments are considered
by the Nomination Committee. In considering any new
appointments to the Board, the balance of skills, knowledge
and experience on the Board are evaluated, together with
the role to be filled and the capabilities required to do so.
All appointments are made on merit.
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MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Colin Dearlove and Ross Ancell
at an Audit Committee meeting
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Remuneration Committee
The Remuneration Committee is responsible for setting the
remuneration of the Chairman and the Executive Directors.
The members of the Remuneration Committee are Ross
Ancell (Chairman) and Colin Dearlove. The Committee
met twice during the year to 30 June 2016 to discuss,
consider and approve the policy and remuneration of the
Chairman and the Executive Directors. The Committee’s
key action during the course of the year was the review and
implementation of the Company’s remuneration policy. In
addition the Committee considered in detail the Executive
Directors’ remuneration, annual bonus plan and long term
incentive plan.
Further details of the remuneration policy and the
package for each Director serving during the year to
30 June 2016 are set out in the Remuneration Report on
pages 44 to 63.
Audit Committee
The Audit Committee (“the Committee”) is a Board
Committee consisting entirely of Non-Executive Directors.
The members of the Committee are Colin Dearlove
(Chairman) and Ross Ancell. Colin Dearlove, as Chairman
of the Committee, has recent relevant financial experience
as Group Finance Director of Barratt Developments plc.
Ross Ancell also has recent relevant financial experience as
Chairman of Churngold Construction Holdings Limited.
The Chairman invites the Chief Executive Officer and the
Chief Financial Officer and other senior management to
attend, along with the Group’s auditor, when required.
The Committee met on five occasions during the year to
30 June 2016, with both members being in attendance for
all meetings. The Committee regularly meets with the
auditor and the internal auditor without the presence of the
Company’s management.
Priorities
The Committee’s key priorities are the effective governance
over the Group’s financial reporting, the adequacy of
related disclosures, the performance of the Group risk
management function and the management of the Group’s
systems of internal control, business risk and related
compliance activities. The Committee also reviews and
monitors the performance and independence of the Group’s
external auditor, the provision of additional services to the
Group by the auditor and oversees the Group’s relationship
with them.
The significant issue considered by the Committee during the
year has been assessed by determining the key risk of
misstatement of the Group’s financial statements relating to:
• the recoverable amount of the Group’s inventories,
including margin recognition.
The Committee monitors the effectiveness of the internal
controls exercised over the key processes employed by the
Group in site development activities and the forecasting
of future costs. The Committee receives regular reporting
as to management’s adherence to the Group’s policies and
procedures in this critically important area of the business.
Similarly the Committee ensures the approach adopted by
management in recovering the cost of both land and work in
progress remains in line with established Group policies and
procedures through regular risk monitoring reports.
The Committee receives regular reports regarding sales
of homes and the costs and possible future costs relating
to individual sites. The Committee has reviewed the
assumptions adopted by management supporting the profit
margin to be recognised on sale of individual homes and
concluded that they are appropriate.
The other key actions of the Committee during the year
were:
• whether the Group can continue to adopt the going
concern basis in preparing the accounts;
• following the recent amendments to the Code, the
Committee considers the Company’s viability over a three
year period to 30 June 2019 as set out in the viability
statement on page 38;
• review of half year and annual results;
• review reports from the Chief Financial Officer on
internal audit matters;
• review of the Group’s Risk Register;
• review of malpractice and whistleblowing; and
• review of legacy contracts of the discontinued
operations.
Committee meetings generally take place prior to Board
meetings and the Committee Chairman provides the Board
with a report on the activity of the Committee and the
matters of particular relevance to the Board in the conduct
of their work.
External audit
KPMG LLP is the Group’s external auditor and they produce
a detailed audit plan identifying their assessment of key
risks each year. For the 2016 financial year the primary risk
identified was in relation to the recoverable amount of the
Group’s inventories.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
37
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Corporate Governance Statement (continued)
The Committee formulates and oversees the Company’s
policy on monitoring external auditor objectivity and
independence in relation to non-audit services. As a result
of the EU Audit Reforms Regulations (as amended 11 June
2016) the auditor is excluded from undertaking a range of
work on behalf of the Group to ensure that the nature of
non-audit services performed or fee income earned relative
to the audit fees does not compromise and is not seen to
compromise the auditor’s independence, objectivity or
integrity. From 1 July 2016 the auditor is therefore not
allowed to carry out tax compliance or advisory services,
appraisal or valuation services, management functions and
litigation support, actuarial services, legal, accounting or
remuneration services on behalf of the Group. From time to
time non-audit services are put out to tender to a number of
suitable firms. The ratio of audit fees to non-audit fees paid
to the auditor in 2016 financial year was 1 to 1.2.
The Committee has reviewed and is satisfied with the
performance of KPMG LLP. Details of the audit fee and fees
paid to KPMG LLP for non-audit services are disclosed in
note 5 to the financial statements.
The Committee assesses the effectiveness of the external
audit process annually with the auditor and the Company’s
management. The Committee holds private meetings with
the auditor on an annual basis. Matters discussed include
the auditor’s assessment of business risks and management
activity thereon, the transparency and openness of
interactions with management and confirmation that
there has been no restriction in scope placed on them by
management. The Committee ensures that the auditor has
exercised its professional scepticism.
The auditor is required to rotate the audit partner
responsible for the Group audit every five years. The current
audit partner was appointed during the year to 30 June 2015
as the previous partner had served a term of five years.
As a result of the EU Audit Reform Regulations all public
interest entities are required to tender the external audit
services every 10 years. The Committee is in the process
of tendering the Group’s external audit services and has
invited the incumbent auditor, KPMG LLP, along with two
other firms to submit proposals. The Committee intends
to conclude the process during October 2016 and will seek
shareholder consent at the AGM in December 2016.
At the request of the Board, the Audit Committee
considered whether the 2016 Annual Report taken as a
whole was fair, balanced and understandable and whether
it provided the necessary information for shareholders
to assess the Company’s performance, business model
and strategy. The Audit Committee was satisfied that,
taken as a whole, the Annual Report is fair, balanced and
understandable.
Viability statement
In accordance with provision C2.2 of the 2014 revision of the
UK Corporate Governance Code, the Directors have assessed
the longer term viability of the Company and the Group over
a longer period than the 12 months required by the ‘going
concern’ principle.
The Directors conducted their assessment over a period
of three years to 30 June 2019, which is in line with the
Group’s financial budget review period and the operational
period of a number of the Group’s housing developments.
This has enabled a meaningful assessment of viability to
be undertaken, utilising detailed financial budgets which
incorporate individual site cash flow forecasts.
In making its assessment, the Directors have considered the
business risks facing the Group and how the Group mitigates
such risks, which are summarised on pages 18 and 19 of the
Strategic Report.
The majority of risks in Gleeson Homes are operational in
nature, and hence these risks are already taken into account
in the individual site cash flow forecasts. The Directors
have considered sensitivities to the individual site cash flow
forecasts prepared based on realistically possible changes
to principal assumptions such as forecast selling prices,
build costs, the number of completions, and gross margins.
Additionally the Directors have considered further measures
which may need to be taken to mitigate the impact of
macroeconomic and industry wide risks, including the ability
of the Group to curtail investment expenditure in new land
purchases and defer new site starts.
For Gleeson Strategic Land, the Directors have considered
the impact of delays to completion of land sales and
reduction in selling prices. The business model is such that
it has the flexibility to reduce expenditure on progressing
new and existing development sites and to continue to
realise cash from consented land albeit at lower levels of
profitability.
Furthermore, a core principle of the Group is to maintain a
cautious approach to debt funding, reflecting the inherent
cyclical nature of the UK property market.
Based on the results of this assessment, the Directors have
a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due
over the three year period of their assessment.
38
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Directors’ Report
The Directors have pleasure in presenting the Annual Report and the
audited Financial Statements for the year ended 30 June 2016.
Strategic Report
In accordance with the requirements of the Companies Act
2006, we present a fair review of the business during the
year to 30 June 2016 and of the position of the Group at the
end of the financial year together with a description of the
principal risks and uncertainties faced by the Group in the
Strategic Report on pages 4 to 27.
Corporate Governance Statement
The Disclosure Guidance and Transparency Rules require
certain information to be included in a corporate
governance statement in the Directors’ Report. Information
that fulfils the requirements of the corporate governance
statement can be found in Corporate Governance on pages
28 to 38.
Results and dividends
The results are set out in the Consolidated Statement
of Comprehensive Income on page 68. The subsidiary
companies affecting the profit or net assets of the Group in
the year are listed in note 15 to the Financial Statements.
An interim dividend of 4.5 pence per share was paid to
shareholders on 4 April 2016 (2015: 2.7 pence). The Board
proposes to pay, subject to shareholder approval at the
2016 AGM, a final dividend of 10.0 pence per share
(2015: 7.3 pence) in respect of the 2016 financial year on
15 December 2016 to shareholders on the register at the
close of business on 18 November 2016. On this basis, the
total dividend for the year will be 14.5 pence per share
(2015: 10.0 pence).
Business review
The review of the development and performance of the
business of the Group during the year and the future
outlook of the Group is set out in the Chairman’s Statement
on pages 2 and 3 and the Strategic Report (Business
Performance) on pages 10 and 11. Details of the principal
risks and uncertainties faced by the Group are set out in the
Strategic Report on pages 18 and 19. The key performance
indicators are set out in the Strategic Report on pages
12 and 13. The Group’s policy in respect of financial
instruments is set out within the Accounting Policies
on pages 74 to 78 and details of credit risk, capital risk
management, liquidity risk and interest rate risk are given in
note 19 to the Financial Statements.
Going concern
The Group’s business activities, together with the factors
likely to affect its future development, performance and
position, are set out in the Strategic Report (Business
Performance) on pages 10 and 11. The financial position of
the Group, its cash flows, liquidity position and borrowing
facilities are described in the Strategic Report (Financial
Review) on pages 14 to 16.
The Group meets its day-to-day working capital
requirements through its cash resources and the committed
loan facility, which was entered into in December 2013 and
amended and restated in March 2016 with an expiry date of
March 2019. As part of their regular going concern review
the Directors specifically address all the risk areas that they
consider material to the assessment of going concern. The
report arising from these discussions is made available to
the auditors and the conclusion is that the Directors have
a reasonable expectation that the Group has adequate
resources to continue in operational existence for at least
twelve months from the date of the financial statements
and thus they continue to adopt the going concern basis of
accounting in preparing the annual Financial Statements.
Political donations
The Company made no political donations in the year or in
the previous year.
Directors and Directors’ interests
The current Directors of the Company and their biographical
details are shown on page 31. None of the Directors have
any contracts of significance with the Company.
Mr Alan Martin resigned as Chief Financial Officer and
Company Secretary in July 2015 and Mr Stefan Allanson was
appointed as Chief Financial Officer and Company Secretary
on the same date.
The beneficial and non-beneficial interests of the Directors
and their connected persons in the shares of the Company at
30 June 2016 and as at the date of this report are disclosed
in the Remuneration Report on page 60. Details of the
interests of the Executive Directors in share options and
awards of shares can be found on page 61 within the
same report.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
39
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Director’s Report (continued)
Appointment and replacement of Directors
In accordance with Code provision B.7.1 the Board has
determined that all Directors will be subject to annual
re-election by shareholders. The Company’s Articles of
Association (“Articles”) provide that at each AGM at
least one-third of the Directors shall retire from office and
shall be eligible for reappointment. In any event, at the
next AGM of the Company, to be held on 8 December 2016,
all of the Directors will, voluntarily, offer themselves for
re-election. Of the Directors standing for re-election,
Jolyon Harrison and Stefan Allanson hold service contracts
that may be terminated by the Company with a notice
period of one year.
Share capital
During the period 423,015 shares were issued to satisfy
shares vesting under the Performance Share Plan.
The Company has one class of share in issue, being ordinary
shares with a nominal value of 2 pence each, with no right
to fixed income.
As at 23 September 2016 the Company has issued share
capital of 54,120,495 ordinary shares, with a nominal
value of £1.1m. Further details are given in note 27 to the
financial statements.
Substantial shareholdings
On 16 September 2016, the shareholdings noted below,
representing 3% or more of the issued share capital, had
been notified to the Company. In addition, as at
16 September 2016, Capita IRG Trustees Limited held
238,082 ordinary shares as trustees of the Employee Share
Purchase Plan.
Name of Shareholder
Funds managed by
Harwood Capital LLP
Schroder Investment
Management Limited
Mrs J C Cooper &
spouse*
BlackRock Investment
Management (UK)
JP Morgan Asset
Management
Number of
shares
Proportion
of total
11,055,000
20.43%
6,301,689
11.64%
2,654,065
4.90%
2,281,361
4.22%
2,071,019
3.83%
*of which 547,250 shares are held in discretionary trusts of which
Mrs J C Cooper is a Trustee.
Directors’ Indemnity
Directors risk personal liability under civil and criminal law
for many aspects of the Company’s main business decisions.
As a consequence the Directors could face a range of
penalties including fines and/or imprisonment. In keeping
with normal market practice, the Company believes that
it is prudent and in the best interests of the Company and
their best interests to protect the individuals concerned
from the consequences of innocent error or omission.
As a result, the Company operates a Directors and Officers’
liability insurance policy in order to indemnify Directors and
other senior officers of the Company and its subsidiaries,
as recommended by the Corporate Governance Code. This
insurance policy does not provide cover where the Director
or officer has acted fraudulently or dishonestly.
In addition, subject to the provisions of and to the extent
permitted by relevant statutes, under the Articles, the
Directors and other officers throughout the year, and at
the date of approval of these financial statements, were
indemnified out of the assets of the Company against
liabilities incurred by them in the course of carrying out
their duties or the exercise of their powers.
Employees
We are committed to ensuring that all employees, potential
recruits and other stakeholders are treated fairly and
equitably. The principles of equality and diversity are
important to us and advancement is based upon individual
skills and aptitude irrespective of sex, sexual orientation,
race, colour, age, disability, nationality or marital/civil
partnership status. Full consideration is given to the
diverse needs of our employees and potential recruits
and we are fully compliant with all current legislation.
The Group is committed to upholding basic human rights
within its business. The Group generates all its revenue
from operations within the United Kingdom and its supply
chain is sourced from within the United Kingdom, as such
our supplier acceptance processes ensure we comply
with national regulations and legislation. Our culture is
aimed at ensuring that employees can grow to their full
potential. We seek to improve employee retention by
providing benefits that employees want including the Group
stakeholder pension (including life assurance arrangements),
private medical insurance, childcare vouchers and income
replacement (PHI) arrangements. Employee share
ownership continues to be encouraged through participation
in the Group Share Purchase Plan.
40
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
We are committed to developing our employees in order
that they can maximise their career potential and achieve
their aspirations and our aim is to provide rewarding
career opportunities in an environment where equality of
opportunity is paramount. Our policy for selection and
promotion is based on an assessment of an individual’s
ability and experiences; we take full consideration of
all applicants on their merits and have processes and
procedures in place to ensure that individuals with
disabilities are given fair consideration.
Every possible effort is made by the Group to retain and
support employees who become disabled whilst in the
employment of the Group.
Employee involvement
The Group regularly provides its employees with information
on matters of concern to them. We consult with our
employees in order to ensure that their views can be taken
into account when making decisions. We utilise our intranet
site to disseminate information and engage with our
employees via manager briefings.
Health and safety
The health and safety of our employees and others is
paramount. Further information on our approach to health
and safety is provided in the Corporate Social Responsibility
Report on page 26.
Greenhouse gas emissions
All disclosures concerning the Group’s greenhouse gas
emissions, as required to be disclosed under regulations
introduced by the Companies Act 2006 (Strategic Report and
Directors’ Report) Regulations 2013 are contained in the
Corporate Social Responsibility Report forming part of the
Strategic Report on page 26.
Disclosure of information to Auditor
The Directors who held office at the date of approval of
this Directors’ Report confirm that, so far as they are each
aware, there is no relevant audit information of which the
auditor is unaware, and each Director has taken all the steps
that he ought to have taken as a Director to make himself
aware of any relevant audit information and to establish
that the auditor is aware of that information.
Shareholder additional information
Following the implementation of the EU Takeover Directive
in the UK, the Company is required to disclose certain
additional information where not covered elsewhere in this
Annual Report.
Rights and obligations attaching to shares
Subject to the Companies Act 2006 and other shareholders’
rights, any share may be issued with such rights and
restrictions as the Company may by ordinary resolution
decide or, if no such resolution has been passed or so far as
the resolution does not make specific provision, as the Board
of Directors (“Board”) for the time being of the Company
may decide. Subject to the Companies Act 2006, the
Articles and any resolution of the Company, the Board may
deal with any unissued shares as it may decide.
Amendment to the Articles of Association
Any amendments to the Articles of Association may be made
in accordance with the provisions of the Companies Act 2006
by way of special resolution.
Voting
Under and subject to the provisions of the Articles and
subject to any special rights or restrictions as to voting
attached to any shares, on a show of hands, every
shareholder present in person shall have one vote and on
a poll every shareholder who was present in person or by
proxy shall have one vote for every share of which he is the
holder. Under the Companies Act 2006, shareholders are
entitled to appoint a proxy to exercise all or any of their
rights to attend and to speak and vote on their behalf at a
general meeting or class meeting.
Restrictions on voting
A shareholder shall not be entitled to vote at any general
meeting or class meeting in respect of any shares held by
him unless all calls and other sums presently payable by him
in respect of that share have been paid.
Deadlines for voting rights
Full details of the deadlines for exercising voting rights in
respect of the resolutions to be considered at the AGM to
be held on 8 December 2016 are set out in the Notice of
the AGM.
Dividends and distributions
The Company may, by ordinary resolution, declare a
dividend to be paid to the shareholders but no dividend shall
exceed the amount recommended by the Board. The Board
may pay interim dividends and also any fixed rate dividend
whenever the financial position of the Company justifies its
payment in the opinion of the Board.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
41
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Director’s Report (continued)
Winding up
Under the Articles, if the Company is in liquidation, the
liquidator may, with the sanction of a special resolution of
the Company and any other authority required by law:
• divide among the shareholders in specie the whole or any
part of the assets of the Company and, for that purpose,
value any assets and determine how the division shall
be carried out as between the shareholders or different
classes of shareholders; or
• vest the whole or any part of the assets in trustees
upon such trusts for the benefit of shareholders as the
liquidator with the like sanction shall think fit.
Variation of rights
The Articles specify that the special rights attached to any
class of shares may, either with the consent in writing of
holders of three-fourths of the issued shares of that class
or with the sanction of a special resolution passed at a
separate meeting of such holders (but not otherwise), be
modified or abrogated.
Transfer of shares
Under and subject to the restrictions in the Articles,
any shareholder may transfer all or any of his shares in
certificated form by transfer in writing, in any usual form,
or in any other form which the Board may approve. The
Board may, save in certain circumstances, refuse to register
any transfer of a certificated share not fully paid up. The
Board may also refuse to register any transfer of certificated
shares unless it is:
• in respect of only one class of shares;
• in favour of no more than four transferees;
• duly stamped or exempt from stamp duty;
• delivered to the office or at such other place as the Board
may decide for registration; and
• accompanied by the certificate for the shares to be
transferred and such other evidence (if any) as the Board
may reasonably require to show the right of the intending
transferor to transfer the shares.
Repurchase of shares
Subject to the provisions of the Companies Acts and to any
rights conferred on the holders of any class of shares, the
Company may purchase all or any of its shares of any class,
including any redeemable shares.
Appointment and replacement of Directors
The Directors shall not, unless otherwise determined by
an ordinary resolution of the Company, be less than three
or more than 15 in number. Directors may be appointed
by the Company by ordinary resolution or by the Board.
A Director appointed by the Board shall retire from office
at the next AGM of the Company but shall then be eligible
for re-appointment. The Board may appoint one or more
Directors to hold any office or employment under the
Company for such period (subject to the Companies Acts)
and on such terms as it may decide and may revoke or
terminate any such appointment. At each AGM any Director
who has been appointed by the Board since the previous
AGM and any Director selected to retire by rotation shall
retire from office. At each AGM, one-third of the Directors
who are subject to retirement by rotation or, if the number
is not an integral multiple of three, the number nearest
to one-third but not exceeding one-third shall retire from
office. In addition, there shall also be required to retire by
rotation any Director who at any AGM of the Company shall
have been a Director at each of the preceding two AGMs
of the Company, provided that he was not appointed or
re-appointed at either such AGM and he has not otherwise
ceased to be a Director and been re-appointed by a general
meeting of the Company at or since either such AGM.
The Company may, by ordinary resolution of which special
notice has been given in accordance with the Companies
Acts, remove any Director before his period of office has
expired notwithstanding anything in the Articles or in any
agreement between him and the Company. A Director may
also be removed from office by the service on him of a
notice to that effect signed by or on behalf of all the other
Directors, being not less than three in number. The office of
a Director shall be vacated if:
i. he is prohibited by law from being a Director;
ii. he becomes bankrupt or makes any arrangement or
composition with his creditors generally;
iii. he is or may be suffering from a mental disorder as
referred to in the Articles;
iv. for more than six months he is absent, without special
leave of absence from the Board, from meetings of the
Board held during that period and the Board resolves
that his office be vacated; or
v. he serves on the Company notice of his wish to resign.
42
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Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Powers of the Directors
The business of the Company shall be managed by the Board,
which may exercise all the powers of the Company, subject
to the provisions of the Articles and any ordinary resolution
of the Company. The Articles specify that the Board may
exercise all the powers of the Company to borrow money
and to mortgage or charge all or any part of its undertaking,
property and assets and uncalled capital and to issue
debentures and other securities, subject to the provisions of
the Articles.
Takeovers and significant agreements
The Company is a party to the following significant
agreements that take effect, alter or terminate on a change
of control of the Company following a takeover bid:
• the Company’s share schemes and plans; and
• the £20m revolving credit facility whereby upon a ‘change
of control’ all amounts become due and payable.
Information rights
Beneficial owners of shares who have been nominated by the
registered holder of those shares to enjoy information rights
under Section 146 of the Companies Act 2006 are required to
direct all communications to the registered holder of their
shares, rather than to the Company’s registrars Capita Asset
Services, or to the Company directly.
Auditor
As a result of the EU Audit Reform Regulations all public
interest entities are required to tender the external audit
services every 10 years. The Committee is in the process of
tendering the Group’s external audit services and has invited
the incumbent auditor, KPMG LLP, along with two other firms
to submit proposals. The Committee intends to conclude
the process during October 2016 and will seek shareholder
consent at the AGM in December 2016.
Annual General Meeting
The Notice of the AGM to be held on 8 December 2016,
together with details of the resolutions to be considered, are
set out in a separate circular.
Deadlines for voting rights
Full details of the deadlines for exercising voting rights in
respect of the resolutions to be considered at the AGM are
set out in the Notice of the AGM.
By order of the Board
Stefan Allanson
Company Secretary
23 September 2016
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
43
MJ Gleeson Group plc: Report and Accounts for the year ended 30 June 2015
Remuneration Committee Report
45 Chairman’s Summary Statement
48 Remuneration Policy Report
58 Annual Report on Remuneration
44
Strategic Report
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Remuneration
Committee Report
Financial
Statements
Further
Information
Chairman’s Summary Statement
Introduction
I am pleased to take this opportunity to set out the Group’s
remuneration strategy and the way it has been implemented
during the past year. Our remuneration report is split into
three parts as follows:
• this letter, which provides an introduction to the
remuneration report;
• our Policy on Directors’ remuneration, which sets out our
proposed future remuneration policy and is subject to a
binding vote at the forthcoming AGM; and
• the Annual Report on Remuneration, which describes how
the policy was implemented in the year to June 2016 and
the plans for the year to June 2017.
Context to the Committees decisions
Since the appointment of the current Chief Executive
Officer, Jolyon Harrison, in July 2012 the Group has seen
year on year continued growth in its key performance metric
of Profit before tax, from £5.8 million in 2013 (Jolyon’s first
year in office) up to £28.2 million in the current year being
reported, an increase of 386% (equivalent to 69% per annum
compound growth). Over the same period the increase in
share price (and dividends paid) has resulted in an increase
in total shareholder return of 313% (this compares to an
increase of 187% in our peer group and a 68% increase in the
FTSE Small Cap index).
Outcome of 2016 remuneration issues
During the financial year the Remuneration Committee
(“the Committee”) undertook its regular annual review
of the Executive Directors’ base salaries and agreed the
performance targets for the annual bonus for 2016.
The Group continued to perform well during the year to
30 June 2016. The performance condition for the Executive
Directors’ 2016 annual bonuses was achievement of Group
profit before tax (before exceptional items) of between
£22.0m and £27.0m. The Group achieved profit before tax
for both continuing and discontinued operations of £27.9m,
which is an increase of 20.3% against the previous year.
Accordingly, annual bonus payments for 2016 will be made
at 100% of base salary for the Chief Executive Officer and
75% of base salary for the Chief Financial Officer, both to be
paid in cash. Alan Martin resigned in July 2015 and will not
receive any bonus for 2016.
Vesting of the November 2012 long term incentive plan
award for the Chief Executive Officer, which matured in
November 2015, was based upon a three year performance
condition which ended on 30 June 2015. The performance
condition was based on total shareholder return achieving
£3.50 by the end of the performance period. The share price
was £4.36 on 30 June 2015 and the performance condition
was met in full. Accordingly 100% of the award, being
423,015 shares, vested to the Chief Executive Officer on
10 November 2015. As there were no other grants under the
2012 plan, this completed the 2012 plan.
No other long term incentive plan awards vested in the year
ended 30 June 2016. However, under the October 2014 long
term incentive award the grant to Alan Martin of 59,231
shares lapsed during the year to 30 June 2016 due to his
resignation as a Director.
The Committee also approved a proposal to implement
a new long term incentive plan for Executive Directors
which will vest in whole or in part on or after the third
anniversary of the date of grant if performance conditions
have been met. The performance condition is based on total
shareholder return for the three financial years from
1 July 2015 to 30 June 2018. The proposal was subsequently
approved by the Board and the award was made on
30 September 2015.
2017 Executive Directors’ remuneration
The focus of the remuneration policy for the Executive
Directors continues to have a significant proportion of
remuneration performance-related and linked closely to the
Group’s long term strategy.
BASE SALARY
The base salary of the Chief Executive Officer for the year
to 30 June 2017 has been increased by 0.8% to £400,000.
The base salary of the Chief Financial Officer for the year
to 30 June 2017 has been increased by 38.9% to £250,000
(£180,000 previously).
The material increase in the salary of the Chief Financial
Officer reflects the fact that the he was employed initially
as Chief Financial Officer and Company Secretary designate
and only subsequently appointed to the Board as Chief
Financial Officer on 31 July 2015. On his appointment
his salary was set below-market and substantially below
that of his predecessor. The Committee has determined
that the increase proposed is appropriate and reflects the
Chief Financial Officer’s performance and contribution
since his Board appointment. It is the Company’s intention
to potentially increase the salary to £300,000 at the
next review date subject to the Chief Financial Officer’s
continued performance and development in the role.
ANNUAL BONUS
The maximum amount payable under the annual bonus
scheme will be 100% of base salary for both the Chief
Executive Officer and Chief Financial Officer. For the
Chief Financial Officer, the performance conditions for the
year to 30 June 2017 remain wholly linked to profit targets.
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Chairman’s Summary Statement (continued)
For the Chief Executive Officer, 2/3 of the award will be
based on profit targets with 1/3 based on the achievement of
personal, or strategic, performance targets.
changes, if approved, will mean that MJ Gleeson has in place
a Policy which is appropriate for the next three-year period
of the Company’s development.
LONG TERM INCENTIVE PLAN (LTIP)
The maximum amount payable under the LTIP will be 300% of
base salary for the Chief Executive Officer and 150% of salary
for the Chief Financial Officer. As in previous years, the LTIP
will vest based on TSR performance measured over a period
of three financial years. The awards will be subject to a two-
year holding period following the performance period.
ONE-OFF CEO AWARD
In addition to the LTIP award it is also proposed to grant a
one-off CEO Award to the Chief Executive Officer. Both of
these awards are designed to ensure a significant portion of
total remuneration is linked to the Group’s strategy and to
shareholder value creation.
New Remuneration Policy
The Group’s current Policy on Directors’ remuneration was
approved by Shareholders at the Company’s 2014 AGM on
12 December 2014 and received a 96.5% vote in favour.
The Policy became effective for a period of up to three years
from the date of approval, which would suggest a normal
review date of 2017.
The development and growth of the business, along with a
desire to ensure that future performance is sustained and
rewarded led the Committee to conclude that a review of
the Policy should be conducted. The Committee reviewed
the remuneration policy for Executive Directors and
subsequently agreed that an amended Policy would be put
to shareholders in 2016.
When undertaking the review, the Committee believed it
was important that the future remuneration Policy was
tailored to MJ Gleeson’s circumstances, such that it:
• Supports the Company’s strategy over the next stage of
development;
• Continues to act as an appropriate tool with which to
attract, retain and motivate the Executive Directors who
are critical to executing the business strategy and driving
the continued creation of value for shareholders;
• Ensures that remuneration is competitive against
companies of a similar size and complexity; and
Summary of proposed changes to Policy
The key proposed changes to the Policy are set out below:
• Introduce a one-off CEO Award with a value of £3m for
the Chief Executive Officer payable on achievement of the
earlier of:
• Achieving a TSR of £10 per share at the end of a 3-year
performance period or cessation if earlier, measured
over an average of 180 days, or
• A change of control or a substantial exit within a 3-year
performance period for shareholders provided that the
event was deemed by the Remuneration Committee to
have delivered value to the shareholders.
• The adoption of a two-year holding period following
the three-year performance period for future awards
under the Long Term Incentive Plan (LTIP). Our current
long-term incentive rules are due to expire next year,
therefore we will be taking the opportunity to update
our rules and put the LTIP to shareholders for approval
alongside the Policy at the 2016 AGM.
A number of minor adjustments to the previous Policy
wording will be included as part of the binding Policy vote
at the 2016 AGM. These changes are intended to reflect best
practice which has developed since the Policy was approved
in 2014 and are intended to enable the effective operation
of the existing arrangements. The Committee considered a
number of approaches on how to motivate and incentivise
the CEO to deliver against challenging strategic objectives.
The Committee recognise that a one-off award does
not conform to standard market practice. However, the
Committee believes that the proposed award provides the
CEO with a meaningful incentive for delivering against our
challenging strategic objectives over the next 3 years and
creating significant additional value for our shareholders.
It is the Committee’s opinion that the proposed approaches
are better aligned with the Group’s remuneration objectives
and the Company’s strategy and will enable us to ensure
Executives continue to remain fully aligned with business
performance.
• Takes into account practice in the Company’s listing
environment whilst being cognisant of its major
shareholders’ views and expectations.
As part of this review the Committee has taken independent
advice, which included looking at comparable remuneration
packages paid to executives in comparable businesses.
As a result of this review, the Committee concluded that
a number of changes to the Policy were required. These
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Remuneration for the year to 30 June 2016 was based on
the 2014 policy as approved by shareholders. Proposed
remuneration for the year ending 30 June 2017 detailed
in this report is based on the policy which has been
approved by the Committee but is still to be approved by
shareholders. The Board reviewed the policy for the other
Non-Executive Directors.
The Committee would like to thank shareholders for their
past support and look forward to your endorsement of
remuneration issues at the forthcoming AGM.
Ross Ancell
Chairman, Remuneration Committee
23 September 2016
Masefield Park
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Remuneration Policy Report
This part of the report sets out the remuneration policy for
the Group and has been prepared in accordance with The
Large and Medium-sized Companies and Groups (Accounts
and Reports) (Amendment) Regulations 2013. The policy has
been developed taking into account the principles of the
UK Corporate Governance Code and the views of our major
shareholders and describes the policy to be applied from
2016 onwards. The policy report will be put to shareholders
for approval at the forthcoming AGM.
Policy overview
In setting the remuneration policy for the Executive
Directors, the Committee takes into account the following
general principles which are:
• to attract, retain and motivate the best possible person
for each position, while aligning remuneration with
shareholder interests;
• to ensure that the remuneration packages are simple and
fair in design so that they are valued by participants;
• to ensure that the fixed element of remuneration (salary,
pension and other benefits) is determined in line with
market rates, taking account of individual performance
and experience, and that a significant proportion of
the total remuneration package is determined by
performance;
• to recognise the importance of rewarding exceptional
performance (but not under-performance) in both the
short and long term;
• to set carefully all targets and associated sliding scale
ranges to ensure that performance is incrementally
rewarded and that executives are not inadvertently
motivated to take inappropriate business risks
(including environmental, social, health, safety and
governance risks); and
• to provide a significant proportion of performance linked
pay in shares allowing executives to build significant
shareholdings in the business, thereby, aligning the
executive’s interests with those of the Company’s
shareholders.
Components of Directors’ remuneration
The key elements of the remuneration package for each Director are set out in the table below:
Element
BASE SALARY
Purpose and link
to strategy
Provides a base level of remuneration to support recruitment and retention of Executive
Directors with the necessary experience and expertise to deliver the Group’s strategy.
Operation
Salaries are normally reviewed annually.
Salary levels are set with reference to:
• personal performance
• company performance
• inflation and earnings forecasts
• state of the market place generally
• increases elsewhere in the Group
• similar roles in the workforce generally
The Committee may on occasion recognise a change in circumstances such as assumed additional
responsibility or an increase in the scale or scope of the role.
Individuals who are recruited or promoted to the Board may, on occasion, have their salaries
set below the targeted policy level until they become established in their role. In such cases
subsequent increases in salary may be higher than the general rises for employees until the
target positioning is achieved.
There are no provisions for recovery or withholding of payment.
Maximum opportunity
The Committee ensures that maximum salary levels are positioned in line with companies of a
similar size and complexity.
In general, salary increases for Executive Directors will be in line with the increase for employees.
The Company will set out in the section headed Annual Report on Remuneration, in the following
financial year, the salaries for that year for each of the Executive Directors.
Performance targets
N/A
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Element
BENEFITS
Purpose and link
to strategy
Operation
Provides a benefits package in line with practice relative to comparators to enable the Company
to recruit and retain Executive Directors with the experience and expertise to deliver the Group’s
strategy.
The Company provides cash benefits and benefits in kind to Executive Directors. These include
but are not limited to:
• company car or cash equivalent
• private fuel
• private medical insurance – family cover
• life insurance
• permanent health insurance
• annual health check
• holiday and sick pay
• professional subscriptions
• reimbursement of expenses incurred on Group matters
The Committee recognises the need to maintain suitable flexibility in the benefits provided to
ensure it is able to support the objective of attracting and retaining personnel in order to deliver
the Group strategy. Additional benefits may therefore be offered such as relocation allowances
on recruitment.
There are no provisions for recovery or withholding of payment.
Maximum opportunity
The value of benefits is based on the underlying cost to the Group and individual circumstances.
There is no prescribed maximum but benefits are in line with market practice.
Performance targets
N/A
Element
PENSION
Purpose and link
to strategy
Operation
Provides a pension provision in line with practice relative to comparators to enable the Company
to recruit and retain Executive Directors with the experience and expertise to deliver the Group’s
strategy.
The Company will contribute to the Group’s defined contribution pension scheme, or to personal
pension arrangements at the request of the individual. The Company contributes at an agreed
percentage of salary.
The Company may also consider a cash alternative (e.g. where a Director has reached the HMRC’s
lifetime or annual allowance limit).
Other than basic salary, no element of the Directors’ remuneration is pensionable. Salary
supplements are not included in base salary to calculate other benefits and incentive
opportunities.
Maximum opportunity
The maximum Company contribution or pension allowance is 25% of salary.
There are no provisions for recovery or withholding of payment.
Directors who are members of the pension scheme may elect to exchange part of their salary in
return for pension contributions.
Performance targets
N/A
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Remuneration Policy Report (continued)
Element
ANNUAL BONUS
Purpose and link
to strategy
To incentivise the achievement of key financial and strategic targets for the forthcoming year
without encouraging excessive risk taking.
Operation
The Committee will determine the bonus to be delivered following the end of the relevant
financial year.
The Company will set out in the section headed Annual Report on Remuneration, in the following
financial year, the nature of the targets and details of the performance conditions, and
weightings and their level of satisfaction for the year being reported.
Normally payable in cash, but Executive Directors may elect to have their bonus payable in
shares.
Performance targets are reviewed annually by the Committee and can include financial and non-
financial targets.
The Committee has the discretion to override the formulaic outturn of the bonus to determine
the appropriate level of bonus payable where it believes the outcome is not truly reflective of
performance and to ensure fairness to both shareholders and participants.
Maximum opportunity
Maximum opportunity of 150% of base salary.
Malus and clawback provisions will apply.
Percentage of bonus maximum earned for levels of performance:
Threshold: 0%
Maximum: 100%
Performance targets
An award under the annual bonus is subject to satisfying financial and strategic / operational
performance / personal performance conditions and targets measured over a period of one
financial year.
A minimum of two thirds of the bonus shall be based on financial performance measures.
The Committe will determine the bonus to be delivered following the end of the relevant
financial year.
The Committee is of the opinion that given the commercial sensitivity arising in relation to the
detailed financial targets used for the annual bonus, disclosing precise targets for the Annual
Bonus in advance would not be in shareholders’ interests. Targets, performance achieved and
awards made will be published at the end of the performance period so that shareholders can
fully assess the basis for any pay-outs under the Annual Bonus.
In exceptional circumstances the Committee retains the discretion to:
• change the performance measures and targets and the weighting attached to the performance
measures and targets part-way through a performance year if there is a significant and
material event which causes the Committee to believe the original measures, weightings and
targets are no longer appropriate; and
• make downward or upward adjustments to the amount of bonus earned resulting from the
application of the performance measures, if the Committee believe that the bonus outcomes
are not a fair and accurate reflection of business performance.
Any adjustments or discretion applied by the Committee will be fully disclosed in the following
year’s Remuneration Report.
The financial targets incorporate an appropriate sliding scale range around a challenging target.
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Element
LONG-TERM INCENTIVE PLAN (“LTIP”)
Purpose and link
to strategy
The purpose of the LTIP is to incentivise and reward Executive Directors in relation to long term
performance and achievement of Company strategy.
This will better align Executive Directors’ interests with the long-term interests of the Company
and act as a retention mechanism.
The award is designed to incentivise Executive Directors to maximise TSR by successfully
delivering the Company’s strategy and to share in the resulting increase in total shareholder
value.
Operation
Awards are granted annually to Executive Directors in the form of a conditional share award, nil
cost option or restricted share award.
Details of the performance conditions for grants made in the year will be set out in the
Annual Report on Remuneration and for future grants in the section headed Annual Report on
Remuneration, in the following financial year.
These will vest at the end of a three year period subject to:
• the Executive Director’s continued employment at the date of vesting; and
• satisfaction of the performance conditions.
Performance targets are reviewed by the Committee for each new award.
Amounts equivalent to any dividends or shareholder distributions may be made in respect of
awards at vesting, if the Committee so determines.
Vested shares will be subject to a two-year holding period, during which participants cannot sell
their vested LTIP awards (other than to cover Income Tax and NIC).
Maximum opportunity
Awards of up to 300% of base salary for the Chief Executive and 200% for other Directors.
Performance targets
For awards made in 2016, the CEO will be awarded 300% of base salary and the CFO 150% of base
salary.
20% of the award will vest for threshold performance.
100% of the award will vest for maximum performance. There is straight line vesting between
these points.
The performance condition for the 2016 LTIP awards is absolute Total Shareholder Return (“TSR”)
and a fairness test, which would consider the underlying financial performance of the Company,
including, but not limited to, the profitability of the Company and shareholder value creation
including the ability of shareholders to access this value creation through the liquidity of the
shares.
The Committee may change the balance of the measures, or use different measures for
subsequent awards, as appropriate.
No material change will be made to the type of performance conditions without prior major
shareholder consultation.
In exceptional circumstances the Committee retains the discretion to:
• vary, substitute or waive the performance conditions applying to LTIP Awards if the Board
considers it appropriate and that the new performance conditions are deemed reasonable and
are not materially less difficult to satisfy than the original conditions; and
• make downward or upward adjustments to the amount vesting under the LTIP resulting from
the application of the performance measures if they believe that the outcomes are not a fair
and accurate reflection of business performance.
The LTIP contains clawback and malus provisions.
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Element
ONE-OFF CEO AWARD
Purpose and link
to strategy
Operation
The proposed one-off award provides the CEO with a meaningful incentive that will reward him
for achieving the Group’s challenging strategic objectives and delivering additional shareholder
value over the next 3 years.
The award is payable in cash at the earlier of 3 years, cessation or change of control/substantial
exit.
Maximum opportunity
A maximum of £3 million is payable for achievement of performance conditions.
The award is subject to the achievement of performance conditions.
No award is payable if the performance conditions are not met.
Performance targets
The award will be payable subject to the earlier of the following:
• Achieving a Total Shareholder Return (TSR) of £10 (i.e. average share price at the end of the
performance period plus dividends paid over the period) at the end of the 3 year performance
period, or cessation if earlier, measured over an average 180 days; or
• A change of control / substantial exit for shareholders within 3 years, provided the event was
deemed by the Committee at the time or shortly after the event to have delivered value to
shareholders.
The award contains clawback and malus provisions.
Element
HMRC APPROVED ALL-EMPLOYEE SCHEME
Purpose and link
to strategy
The HMRC approved all-employee scheme has been designed to encourage all employees to
become shareholders in the Company and thereby align their interests with shareholders.
Operation
The Company operates an all employee scheme in which the Executive Directors are eligible to
participate (which is in line with HMRC legislation and is open to all eligible staff).
Maximum opportunity
The maximums set by legislation from time to time.
Performance targets
N/A
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Remuneration policy for Non-Executive Directors
Element
FEES FOR NON-EXECUTIVE DIRECTORS
Purpose and link
to strategy
Operation
Provides a level of fees to support recruitment and retention of Non-Executive Directors and a
Chairman with the necessary experience to advise and assist with establishing and monitoring the
Group’s strategic objectives.
Fees for Non-Executive Directors are determined by the Chairman and the Executive Directors.
Fees for the Chairman are set by the Remuneration Committee. Fees are set at levels with
reference to sector, FTSE Small Cap and general Non-Executive Director benchmarking data as
appropriate.
Maximum opportunity
Fees are paid in cash and are not performance related. Non-Executive Directors are paid
an annual fee and additional fees are paid to the Chairmen of the Audit, Remuneration and
Nominations Committees to reflect the additional responsibilities.
The Chairman is part of the Group private health scheme. There are no other benefits or
incentive schemes for Non-Executive Directors.
There is no prescribed maximum annual increase. In general the level of fee increase for
the Non-Executive Directors and the Chairman will be set taking account of any change in
responsibility and will take into account the general rise in salaries across the UK workforce.
The Company will set out in the section headed Annual Report on Remuneration, in the following
financial year, the fees for that year.
The Company will pay reasonable expenses incurred by the Non-Executive Directors and
Chairman and may settle any tax incurred in relation to these.
Performance targets
N/A
Rationale for change to Remuneration Policy
There have been no changes to the operation of base salary, pension or benefits. The one-off CEO award is a new element
that did not form part of the previously approved Remuneration Policy.
The following table summarises how the proposed Policy for the Executive Directors differs from the previous Policy and sets
out the rationale for the changes.
Element
ANNUAL BONUS
Proposed changes
to Policy
Rationale for change
There will be no change to the maximum annual opportunity.
Annual bonuses will continue to be paid in cash. In future, all Executive Directors (not just the
Chief Executive Officer) will be able to elect to defer a portion into shares.
The previous requirement that at least 100% of the annual bonus should be based on financial
targets and no more than 50% could be based on non-financial, strategic and/or personal
objectives is re-worded to clarify that a minimum of two-thirds of the maximum bonus
opportunity shall be based on financial measures and up to one-third can be based on non-
financial measures.
The introduction of voluntary deferral into shares for all Executive Directors brings all
Executive Directors in line with each other and with emerging best practice on use of deferred
bonuses.
The wording relating to the mix of financial and non-financial targets is a clarification of the
wording set out in the previously approved Policy.
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Element
LONG-TERM INCENTIVE PLAN (“LTIP”)
Proposed changes to
Policy
There will be no change to the maximum annual LTIP opportunity or performance conditions.
A two-year holding period post-vesting is to be introduced, during which participants cannot
sell their vested LTIP awards (other than to cover Income Tax and NIC).
Rationale for change
The introduction of a holding period increases the long-term nature of the package and aims to
strengthen the alignment of interests between management and shareholders.
Selection of performance measures and target
setting
In the selection of performance measures the Committee
takes into account the Group’s strategic objectives and
short and long-term business priorities. The performance
measures selected reward the delivery of stretching financial
performance and the creation of shareholder value.
The performance targets chosen are set in accordance with
the Group’s operating plan and are reviewed annually to
ensure they are sufficiently stretching. In selecting the
targets the Committee also takes into account analysts’
forecasts, economic conditions and the Committee’s
expectation of performance over the relevant period.
Remuneration Policy for the broader employee
population
The executive remuneration framework set out in this report
follows similar principles as that applied to the Group’s
senior leadership team to ensure our senior management
team is rewarded on a consistent basis. Any differences that
exist arise either because of the Remuneration Committee’s
assessment of business need or commercial necessity.
The principles that underpin our executive remuneration
philosophy also cascade throughout the organisation,
although quantum will vary by level and the provision of
certain components of remuneration (such as benefits,
allowances and long-term incentives) will vary by seniority.
How the Committee will use its discretion
Incentive plans, including annual bonus and LTIP, will be
operated in line with the rules of each scheme or plan
together with any relevant laws and regulations. However,
it is important that the Committee retains appropriate
discretion (as is customary) over the administration and
operation of the incentive plans.
Discretion will include, but is not limited to, the following in
relation to incentive schemes:
• Who is invited to participate or receive grants of awards;
• The size and timing of award grants or payments;
• Discretion required when changes or adjustments are
required in special circumstances (e.g. change of control,
rights issues, special corporate or dividend events, or
change in business strategy);
• The annual review of performance measures and targets
for the annual bonus and incentive schemes (including
LTIP) from year to year;
• The determination of vesting (or payment), and the
treatment of leavers and vesting for leavers;
• The annual review of performance measures and
weighting, and targets for incentive plans over time; and
• As permitted by HMRC and other regulations, in respect of
Sharesave and any Share Incentive Plans.
In relation to incentive schemes including annual bonus and
LTIP, the Committee may adjust performance measures and/
or targets if these have ceased to be appropriate provided
that such adjusted measures or targets will not be materially
less difficult to satisfy. Any use of the above discretions
would, where relevant, be explained in future Remuneration
Reports and may, as appropriate, be the subject of
consultation with the Company’s major shareholders.
Legacy arrangements
For the avoidance of doubt, in approving the Policy
report, authority is given to the Company to honour any
commitments entered into with current and former Directors
that have been disclosed previously to shareholders. It is
also part of this policy that we will honour payments or
awards crystallising after the effective date of this policy but
arising from commitments entered into prior to the effective
date of the new policy, or at a time when the relevant
individual was not a Director of the Company. The Company
will also have the authority to meet any claims against the
Company arising as a result of a Director’s termination.
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Illustration of the application of
Remuneration Policy
The following charts illustrate the future remuneration
packages of the CEO and CFO under the policy set for
FY17 onwards for three indicative levels of performance –
minimum, on-target and maximum:
CHIEF EXECUTIVE OFFICER
• On target performance assumes 50% of annual bonus is
earned and threshold vesting for the performance share
plan;
• Maximum performance assumes full bonus pay out and
full vesting under the performance share plan; and
• Share price movement has been excluded from the above
analysis.
£2,080,000
Note the one-off CEO award opportunity of up to £3m has not
been included in the scenario charts as it is a one-off award
and does not form part of the recurring remuneration policy.
Fixed
Annual bonus
LTIP
£480,000
100%
£920,000
26%
22%
52%
58%
19%
23%
Minimum
On-target
Maximum
CHIEF FINANCIAL OFFICER
Fixed
Annual bonus
LTIP
£303,500
100%
£503,500
15%
25%
60%
£928,500
40%
27%
33%
Minimum
On-target
Maximum
For the purpose of this analysis, the following assumptions
have been made:
• Fixed elements comprise base salary, pension and other
benefits. As an example, for the Chief Executive Officer,
fixed elements comprise salary of £400,000, pension of
£60,000 and benefits of £20,000;
• Base salary levels applying on 1 July 2016;
• Benefit levels are assumed to be the same as the year
ended 30 June 2016;
• Minimum performance assumes no award under the
annual bonus and no vesting is achieved under the
performance share plan;
Service agreements and policy in respect
of loss of office
All Executive Directors’ service agreements are terminable
on 12 months’ notice. In circumstances of termination
on notice, the Committee will determine an equitable
compensation package, having regard to the particular
circumstances of the case. The Committee has discretion
to require notice to be worked or to make payment in lieu
of notice or to place the Director on garden leave for the
notice period.
The dates of the Executive Directors’ service agreements
who served during the year are:
Executive Director
Date of service agreement
Jolyon Harrison
Stefan Allanson
Alan Martin*
1 July 2012
29 June 2015
11 December 2008
* Resigned on 31st July 2015
Base salary, pension and benefits
In case of payment in lieu of notice or garden leave, base
salary, employer pension contributions and employee
benefits will be paid for the period of notice served on
garden leave or paid in lieu of notice.
Annual bonus
Where an Executive Director’s employment is terminated
after the end of a financial year but before the bonus
payment is made, the Executive Director may be eligible
for a bonus award for that financial year subject to an
assessment based on financial and personal performance
achieved over the period.
Where an Executive Director’s employment is terminated
during a financial year, a pro-rata bonus award for the
period worked in that financial year may be payable
subject to an assessment based on financial and personal
performance.
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Remuneration Policy Report (continued)
There is no payment in the event of gross misconduct, wilful
neglect or certain other specified circumstances.
Long-term incentive plan
Awards under the Long Term Incentive Plan will be
determined by the Plan rules which contain discretionary
good leaver provisions for designated reasons (i.e.
participants who leave early on account of injury, disability,
death, a sale of their employer or business in which they
were employed, statutory redundancy, retirement or any
other reason at the discretion of the Committee). In these
circumstances a participant’s awards will not be forfeited
on cessation of employment and instead will vest on the
normal vesting date. In exceptional circumstances, the
Committee may decide that the participant’s awards will
vest early on the date of cessation of employment. In either
case, the extent to which the awards will vest depends on
the extent to which the performance conditions have been
satisfied and a pro rata reduction of the awards will be
applied by reference to the time of cessation (although the
Committee has discretion to disapply time pro rating if the
circumstances warrant it). A two-year holding period will
apply in respect of shares that vest in the event of cessation
of employment. “Bad” leavers forfeit their awards on
cessation of employment.
In the event of a change of control or substantial exit, awards
will be tested against the relevant performance targets at the
date of relevant event. Awards will be pro-rated for time
served and no holding period will apply. If deemed appropriate,
the Committee has discretion to determine whether or not
vesting of an award shall be reduced on a pro rata basis to
take account of the period of time that has elapsed from the
grant date to the date of the relevant event.
One-off CEO award
For a “good” leaver, the award will be tested against the
relevant performance targets on cessation of employment
and the level of vesting determined. A “bad” leaver will
forfeit their award on cessation of employment.
In the event of change of control or substantial exit within
3 years of grant which is deemed by the Committee to have
delivered value to shareholders, the award will vest in full.
If the Committee deems that a change of control or
substantial event has not delivered value to shareholders,
then the award will be forfeited.
Chairman and other Non-Executive Directors’
terms of engagement
The Chairman and the Non-Executive Directors are not
employees; they have letters of appointment which set out
their duties and responsibilities. The dates of each Non-
Executive Directors’ original appointment are as follows:
Non-Executive Director
Date of original
appointment
Expiry of
current term
Dermot Gleeson
27/11/1975
30/09/2016
Ross Ancell
Colin Dearlove
01/10/2006
30/09/2016
03/12/2007
30/09/2016
Christopher Mills
01/01/2009
30/09/2016
All Non-Executive Directors have specific terms of
engagement being an initial period of three years which
thereafter may be extended on an annual basis, subject
to re-election at each AGM. The appointment of the
Chairman may be terminated on six months’ notice and the
appointment of the other Non-Executive Directors may be
terminated on one month’s notice.
Recruitment policy
The remuneration of a new executive Director will include
salary, benefits, pension and participation in the annual
bonus and LTIP schemes normally in accordance with the
policy for executive Directors’ remuneration. Salaries for
new hires will be set to reflect their skills and experience
and the market rate for the role.
If it is considered appropriate to appoint a new Director on
a below market salary (for example, to allow them to gain
experience in the role) their salary may be increased to a
market level by way of a series of above inflation increases
over two to three years.
Although it is not the Company’s policy to provide buy-outs
as a matter of course, the Committee may offer additional
cash and/or share-based elements (on a one-time basis or
ongoing) when it considers these to be in the best interests
of the Group (and therefore shareholders). Any such
payments would be based solely on remuneration lost when
leaving the former employer and would reflect the delivery
mechanism, time horizons and performance requirement
attaching to that remuneration. The Committee may then
grant up to the equivalent value as the lapsed value, where
possible, under the Company’s incentive plans. To the extent
that it was not possible or practical to provide the buyout
within the terms of the Company’s existing incentive plans,
a bespoke arrangement would be used.
In the case of an internal appointment, any variable pay
element awarded in respect of the prior role may be allowed
to pay out according to its terms on grant, adjusted as
relevant to take into account the appointment. In addition,
any other ongoing remuneration obligations existing prior
to appointment may continue, provided that they are put
to shareholders for approval at the first AGM following their
appointment.
56
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
The Committee may also agree that the Company will
compensate executives, both internal and external, for
certain relocation expenses as appropriate.
Statement of consideration of employment
conditions elsewhere in the Group
The Committee does not consult with employees on
Directors’ remuneration but regularly reviews the
remuneration of staff throughout the Group to ensure that
it is attuned to general pay and conditions when considering
the remuneration of executive pay. For example, in
determining salary increases for the Executive Directors the
Committee looks at salary increases across the Group.
Statement of consideration of shareholder
views
The Committee consults with major shareholders and their
representative bodies on remuneration matters, particularly
if any material changes are proposed to the remuneration
policy. In these instances the Committee seeks feedback
from investors and develops and considers its proposals in
light of this feedback.
Carlisle Park
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
57
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Annual Report on Remuneration
The Remuneration Committee
During the year under review the Committee was chaired by Ross Ancell. The other committee member is Colin Dearlove.
Both of the Directors are independent Non-Executive Directors and they have no personal financial interest in matters to
be decided, no potential conflicts of interest arising from cross directorships and no day-to-day involvement in running the
business. Biographical details of the members of the Committee are shown on page 31, and details of their attendance at
the meetings of the Committee during the year ended 30 June 2016 are shown on page 34.
Role and responsibilities of the Remuneration Committee
The Committee’s primary purpose is to make recommendations to the Board on the Group’s framework for executive
remuneration. The Board has also delegated responsibility to the Committee for determining the remuneration, benefits
and contractual arrangements of the Chairman and the Executive Directors. No individual is involved in deciding their own
remuneration.
The Committee has written terms of reference, which are available on the MJ Gleeson Group section of its website at
www.mjgleeson.com, and its responsibilities include:
• Recommending to, and agreeing with, the Board the policy for executive and senior management remuneration;
• Agreeing the terms and conditions of employment for Executive Directors, including their annual remuneration and
pension arrangements, and reviewing such provisions for senior management;
• Agreeing the measures and targets for any performance related bonus and share schemes;
• Agreeing the remuneration of the Chairman of the Board;
• Ensuring that, on termination, contractual terms and payments made are fair both to the Company and the individual so
that failure is not rewarded; and
• Agreeing the terms of reference of any remuneration consultants it appoints.
Remuneration Committee: support and advice
The Committee is supported by the Head of Human Resources, Beth Broughton, and the Company Secretary, Stefan Allanson.
The Company has engaged PricewaterhouseCoopers LLP to provide a one-off project on benchmarking and incentive design to
the Committee on matters relating to remuneration of Executive Directors and senior management, including best practice
in relation to appropriate levels of remuneration. They have specifically advised on the new policy being proposed to the
shareholders this year, the use of LTIP schemes as part of executive remuneration packages and the level of base pay for
Executive Directors and other senior managers. Pricewaterhousecoopers LLP do not provide any other services to the Group
and accordingly the Committee was satisfied that the advice provided was objective and independent.
Statement of voting at Annual General Meeting
At the Annual General Meetings held on 11 December 2015 and 12 December 2014, votes cast by proxy and at the meetings in
respect of the remuneration report and remuneration policy are shown in the table.
2015 AGM: Approval of the Directors’
Remuneration Report
2014 AGM: Approval of the Directors’
Remuneration Policy
Votes in favour
Votes against
No.
%
No.
%
Total
votes cast
Votes
witheld
34,682,871
95.89%
1,485,555
4.11%
36,168,426
1,732,133
39,362,735
96.47%
1,439,820
3.53%
40,802,555
1,000
The Remuneration Committee’s Annual Report on Remuneration for the year ended 30 June 2016 is set out below,
including remuneration for the year ended 30 June 2016 and the proposed implementation of the approved
Remuneration Policy for 2017.
58
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
The auditor is required to report on the following information up to and including the table on Directors’ interest in shares
under the Long Term Incentive Plan.
SINGLE TOTAL FIGURE OF REMUNERATION FOR EACH DIRECTOR FOR THE YEAR ENDED 30 JUNE 2016
Salary
& fees
£000
Benefits
£000
Annual
bonus
£000
Value
of LTIP
award
vesting
£000
Pension
£000
2016
2016
2016
2016
2016
Salary
& fees
£000
Benefits
£000
Annual
bonus
£000
Value
of LTIP
award
vesting
£000
Pension
£000
2015
2015
2015
2015
2015
Total
£000
2016
Total
£000
2015
Chairman
Dermot Gleeson
105
1
-
-
-
106
90
-
-
-
-
90
Executive Directors
Jolyon Harrison
Stefan Allanson1
Alan Martin2
Non-Executive Directors
Ross Ancell
Colin Dearlove
Christopher Mills
397
181
19
50
50
40
20
16
1
-
-
-
397
2,085
135
-
-
-
-
-
-
-
-
-
60
27
5
-
-
-
2,959
378
359
-
19
-
378
964
57 1,796
-
-
-
-
25
231
19
231
551
58 1,090
50
50
40
40
40
30
-
-
-
-
-
-
-
-
-
-
-
-
40
40
30
842
38
532
2,085
92 3,589
809
38
609
1,515
115 3,086
1 Appointed to Board 31 July 2015 but joined the Group on 29 June 2015. As such Remuneration is based on full year plus 2 days from prior year.
2 Resigned 31 July 2015.
During the year no Director waived his entitlement to any emoluments.
Notes to the single total figure of remuneration
Taxable benefits provided to Executive Directors
The main benefits available to the Executive Directors during the year to 30 June 2016 (and their associated values)
were: car allowance of £13,000 for Jolyon Harrison, £13,000 for Stefan Allanson and £1,083 for Alan Martin; car fuel of
£4,557 for Jolyon Harrison, £2,036 for Stefan Allanson and £nil for Alan Martin; and private medical insurance of £2,040 for
Jolyon Harrison, £769 for Stefan Allanson and £60 for Alan Martin. This package of benefits is unchanged from 2015.
Determination of annual bonus
The annual performance-related bonus for the year to 30 June 2016 was based upon achievement against the financial
measure of Group’s pre-exceptional Profit before Tax, for both continuing and discontinued operations, (the “Profit
Measure”), with the following target figures and straight line vesting between the relevant target figures.
Target
Threshold
Target
Profit measure
£m
Bonus achievable as
percentage of salary
22.0
27.0
0%
100%
The Profit Measure achieved for the year to 30 June 2016 was £27.9m, as per the basis of calculation above, and exceeded
that of the prior year by 20.3%. As a result, the annual bonus payments for 2016 will be made, in cash, at 100% of base salary
for the Chief Executive Officer and 75% of base salary for the Chief Financial Officer. In line with the remuneration policy no
bonus will be paid to Alan Martin as he resigned on 31 July 2015.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
59
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Annual Report on Remuneration (continued)
Long Term Incentive Plan – Performance Share Plan
The LTIP columns refer to the Company’s Performance Share Plans, which delivers shares to the Executive Directors subject
to performance targets being reached. The performance target is based on Total Shareholder Return over a three year period.
In the year to 30 June 2016 share awards were made to Jolyon Harrison and Stefan Allanson.
2015 PSP awards
Jolyon Harrison
Stefan Allanson
* excludes dividends
Number of
shares
awarded
250,737
28,421
Threshold award
at £4.92, 20% of
award made
£ *
246,725
27,966
Target award
at £6.15, 100% of
award made
£ *
1,542,032
174,789
In the year to 30 June 2016 shares under the November 2012 Performance Share Scheme vested. The November 2012 long
term incentive award for the Chief Executive Officer, Jolyon Harrison, achieved the three year performance condition which
ended on 30 June 2015. The performance conditions were based on total shareholder return achieving £3.50 by the end of
the performance period on 30 June 2015 and a fairness test. The share price was £4.36 on 30 June 2015 and the fairness
test was passed in FY16; the performance conditions were met in full. Accordingly the 423,015 share award vested to the
Chief Executive Officer on 10 November 2015. The award was valued at the market share price on the day that the shares
vested, being £4.93.
2012 PSP awards
Jolyon Harrison
Number of
shares awarded
423,015
Number of
shares vesting
423,015
Value of
shares vesting
£2,085,464
Pension
The Executive Directors are eligible to participate in the MJ Gleeson Group Pension Plan, a defined contribution arrangement
and both Executive Directors are members of the Plan. The Chief Executive Officer receives a pension contribution of 15% of
salary (2016: £59,550). Alan Martin who resigned on 31 July 2015 as Chief Financial Officer received a pension contribution
of 25% of salary (2016: £4,813) and Stefan Allanson who became Chief Financial Officer on 31 July 2015 receives a pension
contribution of 15% of salary (2016: £27,000).
Directors’ shareholdings and share interests
The share interests of the Directors serving during the year and of their connected persons in the ordinary share capital of
the Company are as shown below:
Director
Dermot Gleeson
Jolyon Harrison
Stefan Allanson (appointed 31 July 2015)
Alan Martin (resigned effective 31 July 2015)
Ross Ancell
Colin Dearlove
Christopher Mills
30 June 2016
30 June 2015
1,086,821
1,732,188
15,634
–
–
–
1,066,846
1,472,218
–
55,412
–
–
11,055,0001
12,055,0001
1 Shares are held in funds managed by Harwood Capital LLP, of which Christopher Mills is a Member/Director.
There are no share ownership requirements for the Directors.
60
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Directors’ interest in shares under the Long Term Incentive Plan
Director
Scheme
J Harrison
PSP 2012
PSP 2014
PSP 2015
S Allanson
PSP 2015
30 June
2015
Granted
during year
Exercised
during year
Lapsed in
year
Share price
at date of
grant of
award
Total
interests
outstanding
at 30 June
2016
Shares
vested
but not
exercised
Date from
which share
may be
exercised
423,015
290,769
-
-
-
-
250,737
28,421
(423,015)
-
-
-
-
-
-
-
-
(59,231)
£1.52
£3.90
£4.82
£4.82
-
-
-
290,769
250,737
28,421
-
- 30/09/2017
- 30/09/2018
- 30/09/2018
A Martin*
PSP 2014
59,231
-
* Following the resignation of Alan Martin on 31 July 2015 his award lapsed.
The middle market price on 30 June 2016 was £4.20 and the range during the year to 30 June 2016 was between £4.05
and £6.25.
Loss of office payments or payments to past Directors
Payments totalling £321,496 were made to Alan Martin in lieu of notice and for loss of office. This comprised amounts
for base salary (£231,000), car allowance (£13,000), pension contributions (£57,500), car fuel (£4,500), untaken holidays
(£7,996), private health cover (£1,200), statutory redundancy (£5,700), and share plan contribution (£600). These payments
were in line with his service contract and are in full and final settlement and no further payments are due to be made.
Total shareholder return performance
We have chosen to compare the Company’s total shareholder return performance over the last seven years with the total
shareholder return for the FTSE Small Cap Index, of which the Company is a member, and a comparator index of listed
housebuilders. The Comparator Group consists of a group of listed housebuilders comprising Barratt Developments, Bellway,
Bovis Homes, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and Telford Homes.
Total shareholder return is the sum of share price appreciation and dividends paid during the year.
MJ GLEESON PLC AND INDEX COMPARISON: JUNE 2009 TO JUNE 2016
MJ Gleeson plc
Housebuilders
FTSE Small Cap
1200
1000
800
600
400
200
0
Jun 2009
Jun 2010
Jun 2011
Jun 2012
Jun 2013
Jun 2014
Jun 2015
Jun 2016
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
61
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Annual Report on Remuneration (continued)
Chief Executive Officer’s remuneration 2010 to 2016
Year
Chief Executive Officer
2016
20155
20145
2013
2012
2011
2010
Jolyon Harrison
Jolyon Harrison
Jolyon Harrison
Jolyon Harrison 2, 3
N/A 4
Chris Holt6
Chris Holt
Single figure of total
remuneration
£
Annual bonus paid against
maximum opportunity
%
LTIP awards vesting against
maximum opportunity
%
2,958,638
1,795,453
793,107
651,000
-
416,608
326,388
100
100
100
81
-
0
40
100
100
-1
-1
-
-1
0
Footnotes:
1. No LTIP vested during that year.
2. Jolyon Harrison appointed Chief Executive Officer from 1 July 2012.
3. The 2013 single figure total remuneration excludes £963,646 previously shown in recognising the 2010 PSP award as the vesting was
deferred. This amount is included in the 2015 figure.
4. No Chief Executive Officer held office during 2012.
5. The figures above for 2015 and 2014 reflect the correction notice issued on 26 November 2015.
6. Total remuneration for Chris Holt who retired from the Board on 30 September 2010. The Board did not appoint a replacement
Chief Executive until 1 July 2012.
Chief Executive Officer’s change in remuneration
Set out below is a comparison of the change in remuneration of the Chief Executive Officer from 30 June 2015 to
30 June 2016, compared to the change in remuneration of the Group’s salaried employees, excluding Executive Directors.
Chief Executive Officer
Average of salaried employees
Percentage change from 2015 to 2016
Annual salary
%
5.0
5.8
Bonus
%
5.0
11.8
Value of taxable
benefits
%
0.0
0.1
Relative importance of spend on pay
Set out below is the amount spent on remuneration for all employees of the Group (including Executive Directors) and the
total amounts paid in distributions to shareholders over the year.
Remuneration for all employees
Total distributions paid
2016
£m
16.1
6.4
2015
£m
13.8
4.1
Difference in
spend
£m
Difference as
percentage
%
2.3
2.3
17
56
62
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Implementation of the Policy for the year to 30 June 2017
Executive Directors
BASE SALARIES
After taking into consideration the increases to Group employees’ salaries on 1 July 2016 (monthly paid employees received
an average 5.2% base salary increase), the Committee has awarded salary increases of 0.8% to the Chief Executive Officer
and 38.9% to the Chief Financial Officer from 1 July 2016. Details for the increase in the Chief Financial Officer’s salary are
included in the Chairman’s Summary Statement on pages 45 to 47.
Jolyon Harrison
Stefan Allanson (appointed 31 July 2015)
Alan Martin (resigned 31 July 2015)
Base salary
from 1 July 2016
£
Base salary for the year
to 30 June 2016
£
400,000
250,000
-
396,900
180,000
231,000
ANNUAL BONUS
The maximum bonus that can be earned in the year will be 100% of base salary for the Chief Executive Officer and 100% of
base salary for the Chief Financial Officer. This is in line with last year for the Chief Executive Officer and is an increase for
the Chief Financial Officer.
The Committee has decided that the Chief Executive Officer’s performance conditions for the 2017 annual bonus will be
based on 2/3 profit before tax and 1/3 strategic objectives. The Chief Financial Officer’s performance condition will be a
profit before tax target. The profit before tax targets are commercially sensitive but will be disclosed in the next Annual
Report on Remuneration. The Committee considers that the target it has set is stretching. The bonus continues to be subject
to robust clawback provisions.
LONG TERM INCENTIVE PLAN AWARDS (LTIP)
In the year to 30 June 2017 no shares are due to vest to Executive Directors under any of the current LTIP schemes. The LTIP
PSP 2014 performance period ends on 30 June 2017. The earliest this scheme can vest is 30 September 2017.
The Committee proposes to make awards to the Executive Directors in the year to 30 June 2017, in line with the disclosed
policy on page 51. These awards are expected to be at 300% and 150% of salary for Jolyon Harrison and Stefan Allanson
respectively. The performance measures are expected to include an absolute TSR target and a fairness test which would
consider the underlying financial performance of the Company, including, but not limited to, the profitability of the Company
and shareholder value creation including the ability of shareholders to access this value creation through the liquidity of the
shares. In addition it is proposed to make a one-off CEO Award to the Chief Executive Officer of up to £3 million. This award
will be paid if TSR over the next 3 years is at least £10.00 per share or there has been a substantial exit for shareholders
which is deemed by the Committee to have delivered substantial additional value to shareholders.
PENSION
There are no changes to pension benefits for 2017; current arrangements are set out on page 60.
Chairman and Non-Executive Directors fees
The Committee has agreed that the Chairman’s fee for 2017 should increase by £5,500, to £110,500 with effect from
1 July 2016 which includes the additional fee of £10,500 for chairing the Nomination Committee. The Board as a whole
determine the fees for the Non-Executive Directors. The fees for the Non-Executive Directors remain unchanged at £39,500
plus an additional £10,500 for chairing a Board Committee.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
63
Financial Statements
65
Statement of Directors’ Responsibilities
69 Consolidated Statement of Financial Position
66
Independent Auditor’s Report
70 Consolidated Statement of Changes in Equity
68 Consolidated Income Statement
72 Consolidated Statement of Cashflow
68 Consolidated Statement of Comprehensive Income
74 Notes to the Financial Statements
64
MJ Gleeson Group plc: Report and Accounts for the year ended 30 June 2015
Lowfield Park phase 2
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Statement of Directors’ Responsibilities
on the Company’s website. Legislation in the UK governing
the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the
annual financial report
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with
the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
• the Strategic Report and the Directors’ Report includes
a fair review of the development and performance
of the business and the position of the issuer and the
undertakings included in the consolidation taken as a
whole, together with a description of the principal risks
and uncertainties that they face.
By order of the Board
J Harrison
Director
23 September 2016
S Allanson
Director
23 September 2016
Statement of Directors’ responsibilties
in respect of the Annual Report and the
Financial Statements
The Directors are responsible for preparing the Annual
Report and the Group and parent company financial
statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Group and
parent company financial statements for each financial year.
Under that law they are required to prepare the Group
financial statements in accordance with IFRSs as adopted by
the EU and applicable law and have elected to prepare the
parent company financial statements on the same basis.
Under company law the Directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
parent company and of their profit or loss for that period.
In preparing each of the Group and parent company financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable
and prudent;
• state whether they have been prepared in accordance
with IFRSs as adopted by the EU; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group
and the parent company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the parent company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
parent company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They have
general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are
also responsible for preparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report and Corporate
Governance Statement that complies with that law and
those regulations.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
65
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Independent Auditor’s Report
Independent Auditor’s Report to the Members
of MJ Gleeson plc only
Opinions and conclusions arising from our audit
1 Our opinion on the financial statements is unmodified
We have audited the financial statements of MJ Gleeson
plc for the year ended 30 June 2016 set out on pages 68
to 100. In our opinion:
• the financial statements give a true and fair view of
the state of the Group’s and of the parent company’s
affairs as at 30 June 2016 and of the Group’s profit for
the year then ended;
• the Group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards as adopted by the European Union
(IFRSs as adopted by the EU);
• the parent company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the EU and as applied in accordance with the
provisions of the Companies Act 2006; and
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
2 Our assessment of risks of material misstatement
In arriving at our audit opinion above on the financial
statements the risk of material misstatement that has the
greatest effect on our audit was as follows:
Recoverable amount of inventories, including
margin recognition - £114.2m (2015: £108.2m)
Risk vs 2015: tu
Refer to page 37 Audit Committee Report, page 76
accounting policy, and page 88 notes.
The risk
Inventories, relating to work-in-progress on sites under
development, and land, represent 63.2% of total assets.
As work-in-progress is held at the lower of cost and
recoverable amount (which is determined based on net
realisable value), the recoverable amount is dependent
on estimates of total build costs (including future costs
to complete) and future selling prices. Actual build costs
may differ from those forecast due to both changing
market conditions, and unforeseen events during
construction. Sales prices have inherent uncertainty due
to changes in market conditions. Incorrect estimates of
selling prices and future costs may result in the Group
failing to identify when net realisable value is below cost
and therefore a failure to record the necessary reduction
in carrying value. The risk in this area is greater where
there is significant work in progress, costs to complete
and/or low margins.
As the gross profit recognised on individual sales depends
on the carrying value of work in progress relating to that
site and the method of allocation of the carrying amount
to sales made during the year, these estimates also
impact the timing and amount of profit recognition.
Our response
Our procedures included:
• Assessing the adequacy of the Group’s controls over
site valuations, including costs to complete, sales
prices, and the authorisation and recording of costs;
• Focusing our detailed testing on the higher risk sites
(high inventory values at year-end, high costs to
complete with low expected margin or slow rates of
sale). For a sample of such sites with a higher risk,
we assessed the historical accuracy of forecast costs
to complete against actual amounts incurred and
assessed the reasonableness of forecast selling prices
against those currently being achieved;
• Assessing the level of gross margin achieved on
individual sites against that recorded previously and
against future forecasts;
• For a sample of sites, assessing whether suitable
amounts of work in progress were transferred to
the Income Statement on plot sales in order to
give comfort over appropriate inclusion of these
transactions at an appropriate margin through
recalculation. Considering the profit recognised on
completed sites over the period to confirm consistency
of the margins;
• Assessing the carrying value of land and
appropriateness of provisions in relation to its
realisable value based on forecast sales prices;
• Assessing the carrying amount of work in progress on
individual sites against sales reservations and agreed
contracts to assess realisable value; and
• Assessing the adequacy of the Group’s disclosures
about the degree of estimation involved in arriving at
the carrying value of work in progress.
3 Our application of materiality and an overview of the
scope of our audit
The materiality for the Group financial statements as
a whole has been set at £1.41 million (2015: £1.1m)
determined by reference to a benchmark of Group profit
before taxation (of which it represents approximately
5% (2015: 4.7%)).
We reported to the Audit Committee any corrected
or uncorrected identified misstatements exceeding
individual divisional reporting thresholds, in addition to
other identified misstatements that warranted reporting
on qualitative grounds. Furthermore, we reported
differences exceeding the Group reporting threshold
of £70.5k.
66
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Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Audits for group reporting purposes were performed
over all the Group’s components covering 100% of Group
revenue, profit before taxation and total assets. These
audits were performed to component materiality levels,
which were set individually for each component and
ranged from £0.30 million to £0.95 million, having regard
to the mix of size and risk profile of the Group across the
components.
The Group audit team performed and reviewed all of the
work discussed above.
4 Our opinion on other matters prescribed by the
Companies Act 2006 is unmodified
In our opinion:
• the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance
with the Companies Act 2006; and
• the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with
the financial statements.
5 We have nothing to report on the disclosures of
principal risks
Based on the knowledge we acquired during our audit,
we have nothing material to add or draw attention to in
relation to:
• the directors’ Viability Statement on page 38,
concerning the principal risks, their management,
and, based on that, the directors’ assessment and
expectations of the Group’s continuing in operation
over the three years to 30 June 2019; or
• the disclosures in note 1 of the financial statements
concerning the use of the going concern basis of
accounting.
6 We have nothing to report in respect of the matters on
which we are required to report by exception
Under ISAs (UK and Ireland) we are required to report to
you if, based on the knowledge we acquired during our
audit, we have identified other information in the annual
report that contains a material inconsistency with either
that knowledge or the financial statements, a material
misstatement of fact, or that is otherwise misleading.
In particular, we are required to report to you if:
• we have identified material inconsistencies between
the knowledge we acquired during our audit and
the directors’ statement that they consider that
the annual report and financial statements taken
as a whole is fair, balanced and understandable and
provides the information necessary for shareholders to
assess the Group’s position and performance, business
model and strategy; or
• the Audit Committee Report does not appropriately
address matters communicated by us to the Audit
Committee.
Under the Companies Act 2006 we are required to report
to you if, in our opinion:
• adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
• the parent company financial statements and the part
of the Directors’ Remuneration Report to be audited
are not in agreement with the accounting records and
returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Under the Listing Rules we are required to review:
• the directors’ statements, set out on pages 38 to 39,
in relation to going concern and longer-term viability;
and
• the part of the Corporate Governance Statement
on page 36 in the Corporate Governance Report
relating to the Company’s compliance with the eleven
provisions of the 2014 UK Corporate Governance Code
specified for our review.
We have nothing to report in respect of the above
responsibilities.
Scope of report and responsibilities
As explained more fully in the Directors’ Responsibilities
Statement set out on page 65, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view.
A description of the scope of an audit of financial
statements is provided on the Financial Reporting Council’s
website at www.frc.org.uk/auditscopeukprivate. This report
is made solely to the Company’s members as a body and is
subject to important explanations and disclaimers regarding
our responsibilities, published on our website at www.kpmg.
com/uk/auditscopeukco2014a, which are incorporated into
this report as if set out in full and should be read to provide
an understanding of the purpose of this report, the work we
have undertaken and the basis of our opinions.
Johnathan Pass (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
1 Sovereign Square, Sovereign Street, Leeds LS1 4DA
23 September 2016
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
67
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Consolidated Income Statement
for the year ended 30 June 2016
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses before restructuring costs
Exceptional restructuring costs
Administrative expenses
Operating profit
Exceptional provision for diminution in value of investments
Financial income
Financial expenses
Profit before tax
Tax
Profit for the year from continuing operations
Discontinued operations
Loss for the year from discontinued operations (net of tax)
Profit for the year
Earnings per share attributable to equity holders of parent company
Basic
Diluted
Earnings per share from continuing operations
Basic
Diluted
The notes on pages 74 to 100 form part of these financial statements.
Note
2016
£000
2015
£000
142,065
117,588
(94,509)
47,556
(19,390)
-
(19,390)
28,166
-
512
(440)
28,238
(4,934)
23,304
(77,287)
40,301
(17,019)
(1,236)
(18,255)
22,046
(4,896)
496
(383)
17,263
(4,848)
12,415
(345)
(207)
22,959
12,208
42.59 p
42.51 p
22.77 p
22.61 p
43.23 p
43.15 p
23.16 p
22.99 p
4
4
7
7
8
3
10
10
10
10
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2016
Profit for the year
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Change in value of available for sale financial assets
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to equity holders of parent
company
The notes on pages 74 to 100 form part of these financial statements.
Note
2016
£000
2015
£000
22,959
12,208
(584)
(584)
-
-
22,375
12,208
68
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Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Consolidated Statement of Financial Position
at 30 June 2016
Non-current assets
Plant and equipment
Investment property
Investments in joint ventures
Investments in subsidiaries
Trade and other receivables
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Non-current liabilities
Provisions
Current liabilities
Trade and other payables
Provisions
UK corporation tax
Total liabilities
Net assets
Equity
Share capital
Share premium account
Capital redemption reserve
Available for sale reserve
Retained earnings
Total equity
Group
2016
£000
Group
2015
£000
Company
2016
£000
Company
2015
£000
Note
11
12
13
15
17
23
16
17
25
21
20
21
8
27
1,274
506
-
-
13,527
4,567
1,236
506
15
-
19,606
5,668
5
-
-
60,800
-
15
10
-
-
20,800
-
-
19,874
27,031
60,820
20,810
114,238
23,284
23,244
108,222
17,530
15,809
-
92,826
1,359
-
56,108
848
160,766
141,561
94,185
56,956
180,640
168,592
155,005
77,766
(100)
(59)
-
-
(26,904)
(111)
(620)
(27,635)
(31,790)
(214)
-
(50,127)
-
3,174
(32,004)
(46,953)
(1,916)
-
-
(1,916)
(27,735)
(32,063)
(46,953)
(1,916)
152,905
136,529
108,052
75,850
1,082
23
-
(584)
152,384
1,074
23
-
-
135,432
1,082
23
-
-
106,947
1,074
23
-
-
74,753
152,905
136,529
108,052
75,850
The financial statements were approved by the Board of Directors on 23 September 2016 and were signed on its behalf by:
J Harrison
Director
S Allanson
Director
The notes on pages 74 to 100 form part of these financial statements.
Reg. No. 9268016
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
69
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Consolidated Statement of Changes in Equity
for the year ended 30 June 2016
Share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Available
for sale
reserve
£000
Retained
earnings
£000
Note
Total
£000
GROUP
At 1 July 2014
Total comprehensive income for the period
Profit for the period
Total comprehensive income for the period
Transactions with owners, recorded
directly in equity
Contributions and distributions to owners
Share issue
Issue of preference shares
Redemption of preference shares
Scheme of arrangement with shareholders
Share reduction
Purchase of own shares
Share-based payments
Dividends
Transactions with owners, recorded
directly in equity
1,063
6,436
120
-
120,472
128,091
-
-
-
-
11
50
(50)
55
-
-
-
-
-
-
-
28
27
9
77,324
(6,468)
(120)
(77,324)
-
-
-
-
-
-
-
-
-
-
-
-
12,208
12,208
-
12,208
12,208
-
-
-
-
-
-
-
-
-
-
-
(70,736)
77,324
(25)
266
66
50
(50)
-
-
(25)
266
(4,077)
(4,077)
11
(6,413)
(120)
-
2,752
(3,770)
At 30 June 2015
1,074
23
-
-
135,432
136,529
Total comprehensive income for the period
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Transactions with owners, recorded
directly in equity
Contributions and distributions to owners
Share issue
Purchase of own shares
Share-based payments
Dividends
Transactions with owners, recorded
directly in equity
9
-
-
-
8
-
-
-
8
-
-
-
-
-
-
-
-
At 30 June 2016
1,082
23
-
-
-
-
-
-
-
-
-
-
22,959
22,959
(584)
-
(584)
(584)
22,959
22,375
-
-
-
-
-
(46)
420
8
(46)
420
(6,381)
(6,381)
-
(6,007)
(5,999)
(584)
152,384
152,905
70
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Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
COMPANY
At 1 July 2014
Total comprehensive income for the period
Loss for the period
Total comprehensive income for the period
Transactions with owners, recorded
directly in equity
Contributions and distributions to owners
Share issue
Issue of preference shares
Redemption of preference shares
Scheme of arrangement with shareholders
Share reduction
Purchase of own shares
Share-based payments
Dividends
Transactions with owners, recorded
directly in equity
At 30 June 2015
Total comprehensive income for the period
Profit for the period
Total comprehensive income for the period
Transactions with owners, recorded
directly in equity
Contributions and distributions to owners
Share issue
Purchase of own shares
Share-based payments
Dividends
Transactions with owners, recorded
directly in equity
Share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Available
for sale
reserve
£000
Retained
earnings
£000
Note
Total
£000
-
-
-
-
-
-
-
-
-
-
1,074
23
50
(50)
77,324
(77,324)
-
-
-
1,074
1,074
-
-
8
-
-
-
8
-
-
-
-
-
-
-
23
23
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,220)
(1,220)
(1,220)
(1,220)
-
-
-
-
-
-
-
-
-
-
-
-
1,097
50
(50)
77,324
77,324
(64)
161
-
(64)
161
(1,448)
(1,448)
-
75,973
77,070
-
74,753
75,850
-
-
38,254
38,254
38,254
38,254
-
-
-
-
-
(99)
420
8
(99)
420
(6,381)
(6,381)
-
(6,060)
(6,052)
-
106,947
108,052
At 30 June 2016
1,082
23
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
71
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Consolidated Statement of Cashflow
for the year ended 30 June 2016
Note
3
11
Operating activities
Profit before tax from continuing operations
Loss before tax from discontinued operations
Depreciation of plant and equipment
Share-based payments
Profit on sale of available for sale assets
Loss on sale of other property, plant and equipment
Profit on sale of assets held for sale
Impairment of investments in joint ventures
Capitalisation of available for sale assets
Financial income
Financial expenses
Dividends received
Operating cash flows before movements in working
capital
Impairment of investment
Increase in inventories
(Increase)/decrease in receivables
(Decrease)/increase in payables
Increase/(decrease) in amounts due from subsidiary
undertakings
Decrease in amounts due to subsidiary undertakings
Group
2016
£000
Group
2015
£000
Company
2016
£000
Company
2015
£000
28,238
17,263
38,289
(1,220)
(336)
(207)
-
-
27,902
17,056
38,289
(1,220)
763
420
(73)
129
-
15
-
(512)
440
-
798
266
(171)
104
(50)
-
(22)
383
-
5
420
4
161
-
-
-
-
-
-
-
-
-
-
(539)
207
(496)
(40,854)
440
-
(5,000)
29,084
17,868
(1,700)
(6,387)
-
4,896
(6,016)
(7,506)
(604)
(16,420)
(4,940)
9,602
-
-
571
(294)
-
-
(251)
1,748
-
-
-
-
48,224
(55,609)
(37,010)
-
Cash generated/(utilised) in operating activities
17,524
8,440
9,791
(60,499)
Tax paid
Interest paid
(3,224)
(440)
(79)
(383)
(3,224)
(440)
(79)
(207)
Net cash flow surplus/(deficit) from operating activities
13,860
7,978
6,127
(60,785)
Investing activities
Proceeds from disposal of available for sale assets
Proceeds from disposal of investment properties
Proceeds from disposal of plant and equipment
Dividends received
Interest (paid)/received
Purchase of plant and equipment
Investments in subsidiaries
Net cash flow (deficit)/surplus from investing activities
926
-
8
-
-
11
(940)
-
(6)
735
236
15
-
(3)
(870)
-
113
-
-
-
-
856
-
-
-
-
-
5,000
538
(14)
(20,800)
856
(15,276)
72
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Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Financing activities
Repayment of borrowings
Proceeds from issue of shares
Purchase of own shares
Dividends paid
Net cash flow (deficit)/surplus from financing activities
Group
2016
£000
Group
2015
£000
Company
2016
£000
Company
2015
£000
Note
-
8
(46)
(6,381)
(6,419)
(1,933)
66
(25)
(4,077)
(5,969)
-
8
(99)
(6,381)
(6,472)
-
78,421
(64)
(1,448)
76,909
9
Net increase in cash and cash equivalents
7,435
2,122
511
848
Cash and cash equivalents at beginning of year
15,809
13,687
848
-
Cash and cash equivalents at end of year
25
23,244
15,809
1,359
848
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
73
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Remuneration
Committee Report
Financial
Statements
Further
Information
Notes to the Financial Statements
for the year ended 30 June 2016
1 Accounting policies
MJ Gleeson plc (“the Company”) is a public limited company which is listed on the London Stock Exchange and is incorporated and
domiciled in the United Kingdom. The address of the registered office is 6 Europa Court, Sheffield Business Park, Sheffield, S9 1XE.
Statement of compliance
Both the Company financial statements and the Group financial statements have been prepared and approved by the Directors in
accordance with International Financial Reporting Standards as adopted by the European Union (“IFRSs”).
Basis of preparation
Assets and liabilities in the financial statements have been valued at historic cost except where otherwise indicated in these
accounting policies.
The Company has taken advantage of section 408 of the Companies Act 2006 and consequently the Statement of Comprehensive
Income of the parent company is not presented as part of these financial statements. The profit of the parent company in the
financial year amounted to £38,254,000 (2015: loss of £1,220,000).
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial
statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all its subsidiary undertakings
(together referred to as the “Group”). Joint ventures are accounted for using the equity method of accounting.
Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for at least twelve months from the date of the financial statements.
Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights
that are currently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control commences until the date that control ceases.
On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair value. Any excess of
the fair value of consideration given for the acquisition over the fair values of the identifiable net assets acquired is recognised
as goodwill. In circumstances where the fair values of the identifiable net assets exceed the cost of acquisition, the excess is
immediately recognised in the Statement of Comprehensive Income. Acquisition related costs are expensed as incurred.
Revenue recognition
Revenue represents the fair value of work done on contracts performed during the year on behalf of customers or the value of
goods and services delivered to customers. Revenue is recognised as follows:
• Revenue from homes sales, other than construction contracts, is recognised when contracts to sell are completed and title has
passed.
• Revenue from property and land sales is recognised at the earlier of when contracts to sell are completed and title has passed
or when unconditional contracts to sell are exchanged.
Appropriate provision against claims from customers or third parties is made in the year in which the Group becomes aware that
a claim may arise.
Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Group’s other components, and for which
discrete financial information is available. All operating segments’ operating results are reviewed regularly by the Executive
Directors to make decisions about resources to be allocated to the segment and to assess its performance. Inter-segment pricing
is determined on an arm’s length basis. Segment results, assets and liabilities include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the period
to acquire plant and equipment.
74
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Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Impairment: Financial assets
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is
objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred
after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that
asset that can be estimated reliably.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, if no impairment loss had been recognised.
Impairment: Non-financial assets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses
are recognised in profit or loss.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, if no impairment loss had been recognised.
Exceptional items
Items that are both material in size and unusual or infrequent in nature are presented as exceptional items in the Statement
of Comprehensive Income. The Directors are of the opinion that the separate recording of exceptional items provides helpful
information about the Group’s underlying business performance. Examples of events that may give rise to the classification of
items as exceptional are the restructuring of existing and newly-acquired businesses; gains or losses on the disposal of businesses
or individual assets; asset impairments, including land, work-in-progress and amounts recoverable on construction contracts; and
recognition of deferred tax asset for previously unrecognised tax losses.
Leasing
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Statement of
Comprehensive Income on a straight-line basis over the period of the lease.
Financial income and expenses
Finance income comprises interest income on funds invested, dividend income and the unwinding of discounts on deferred receipts.
Interest income is recognised as it accrues, using the effective interest method. Dividend income is recognised in the Statement
of Comprehensive Income on the date that the Group’s right to receive payment is established.
Finance expenses comprise interest expense on borrowings and unwinding of the discount on deferred payments and provisions. All
borrowing costs are recognised in the Statement of Comprehensive Income using the effective interest method.
Plant and equipment
Depreciation is charged so as to write off cost of assets over their estimated useful lives, using the straight-line method, on the
following bases:
Plant and machinery between 3 and 6 years
Depreciation of these assets is charged to the Statement of Comprehensive Income.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
75
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Further
Information
Notes to the Financial Statements (continued)
Investment properties
Investment properties, which are ground rent properties held to earn rentals and/or for capital appreciation, are stated at their
fair values at the balance sheet date. Gains or losses arising from changes in the fair values of investment properties are included
in the Statement of Comprehensive Income in the period in which they arise.
Investment properties held by the Group comprise ground rents which are carried at fair value based on a Directors’ valuation. The
properties are valued on a value-in-use basis.
Joint ventures
A joint venture is an entity over which the Group is in a position to exercise joint control through participation in the financial and
operating policy decisions of the venture. The joint venture entity operates in the same way as other enterprises, except that a
contractual arrangement between the venturers establishes joint control over the economic activity of the entity. Joint ventures
are accounted for using the equity method of accounting. The Group’s share of the results of joint ventures is reported in the
Statement of Comprehensive Income as part of the operating profit and the net investment disclosed in the Statement of Financial
Position. Revaluation gains and losses which arise on investment properties held by joint ventures are recognised in the Statement
of Comprehensive Income in share of joint venture results net of any related deferred tax.
Other investments
Other investments are stated at fair value, with any resultant gains or losses taken to equity.
Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Deferred
land purchases are included in inventories at their net present values at original purchase date. Land options are included in
inventories at the lower of cost or net realisable value.
Amounts due from construction contract customers
Amounts due from construction contract customers represent the value of work carried out at the balance sheet date, less a
provision for foreseeable losses less progress billings (see revenue recognition accounting policy).
Available for sale financial assets
Available for sale financial assets due after more than one year, which represent receivables in respect of shared equity properties,
are recorded at fair value, being the amount receivable by the Group discounted to present day values. The difference between the
amount receivable by the Group and the initial fair value is credited over the deferred term to finance income, with the financial
asset increasing to its full cash settlement value on the anticipated receipt date. Credit risk is accounted for in determining
fair values and appropriate discount factors are applied. The Group holds a second charge over property sold under shared
equity schemes. Changes in the fair value of available for sale financial assets are recognised in other comprehensive income.
Interest calculated using the effective interest method, dividends, and impairment losses on available for sale financial assets are
recognised in the income statement.
Trade receivables
Trade receivables are initially measured at fair value. Appropriate allowances for estimated irrecoverable amounts are recognised
in the Statement of Comprehensive Income when there is objective evidence that the asset is impaired. The allowance recognised
is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted
at the effective interest rate computed at initial recognition.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits, other short-term highly liquid investments that are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value. The Group had no bank
overdrafts at the year end.
Discontinued operations
A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical
area of operations or is a subsidiary acquired exclusively with a view to resale, that has been disposed of or has been abandoned.
Discontinued operations are presented in the Statement of Comprehensive Income (including the comparative period) as a single
line entry recording the gain or loss of the discontinued operation and the gain or loss recognised on the remeasurement to fair
value less costs to sell. If the discontinued operations are sold, the net gain or loss from the sale is also recognised in the single
line entry.
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Committee Report
Financial
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Further
Information
Loans and borrowings
Loans and borrowings are initially measured at cost and are subsequently reviewed to ascertain whether a fair value adjustment
is required.
Trade and other payables
Trade and other payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective
interest rate method.
Tax
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive
Income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying values of assets and liabilities for financial reporting
purposes and the values used for taxation purposes. The following temporary differences are not provided for: the initial
recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than
in a business combination; and differences relating to investments in subsidiaries to the extent that they will probably not reverse
in the foreseeable future and the Group can control the timing of the reversal. The amount of deferred tax provided is based
on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which
the asset can be utilised.
Employee benefits
Obligations for contributions to defined contribution pension schemes are charged to the Statement of Comprehensive Income in
the period to which the contributions relate.
Share options
The share option schemes allow employees to acquire shares in the ultimate parent company; these awards are granted by the
ultimate parent company. The fair value of options granted is recognised as an employee expense, with a corresponding increase
in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally
entitled to the options. The fair value of the options granted is measured using the Monte Carlo valuation model, taking into
account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to
reflect the actual number of share options that vest, except where forfeiture is due only to share prices not achieving the threshold
for vesting. The cost of the share-based award relating to each subsidiary is calculated, based on an appropriate apportionment,
at the date of grant and recharged through intercompany.
Own shares held by Employee Benefit Trusts
The Group has elected to treat the Employee Benefit Trusts (“EBT”) as separate legal entities and as subsidiaries of the parent. Any
loan made to the EBT is accounted for as an intercompany loan with the parent. These shares are not treasury shares as defined
by the London Stock Exchange.
Dividends
Dividends are recorded in the Group’s financial statements when paid. Final dividends are recorded in the Group’s financial
statements in the period in which they receive shareholder approval.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision
affects both current and future periods.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
77
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Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Notes to the Financial Statements (continued)
The key judgement and sources of estimation uncertainty at the balance sheet date are:
Land and work in progress
Valuations which include an estimation of costs to complete and remaining revenues are carried out at regular intervals throughout
the year, during which site development costs are allocated between units built in the current year and those to be built in future
years. These assessments include a degree of inherent uncertainty when estimating the profitability of a site and in assessing any
impairment provisions which may be required.
Available for sale financial assets (shared equity)
Management has reviewed the valuation of the available for sale financial assets in the light of current market conditions, expected
house price inflation, cost of money and the expected time to realisation of the assets and is therefore subject to a degree of
inherent uncertainty.
Deferred tax
Management has reviewed the recognition of tax losses within the Group to ensure deferred tax is only recognised on tax losses
when it is probable the losses will be utilised in full in future years. The judgement to recognise the deferred tax asset is
dependent upon taxable profits arising in the same company as the losses originally arose and the Group’s expectations regarding
future profitability including site revenue and cost forecasts for future years which contain a degree of inherent uncertainty.
Investments and investments in subsidiaries
Investments and investments in subsidiaries are stated at the lower of cost and net realisable value, which is dependent upon
management’s assessment of future trading activity and is therefore subject to a degree of inherent uncertainty.
Adoption of new and revised standards
For the year ended 30 June 2016, the Group has adopted the following standards:
IFRS 14
IFRS 11
IAS 16
IAS 38
IAS 27
Annual Improvements 2012-2014
‘Regulatory Deferral Accounts’
(Amended) ‘Accounting for Acquisitions of Interests in Joint Operations’
(Amended) ‘Property, plant and equipment’
(Amended) ‘Intangible Assets’
(Amended) ‘Separate Financial Statements’
Standards not yet applied
There are a number of standards and interpretations issued by the International Accounting Standards Board that are effective for
financial statements after this reporting period. The following have not been adopted by the Group in preparing the accounts for
the year ended 30 June 2016:
Standard
IAS 12
IFRS 15
IFRS 9
IFRS 16
(Amended) ‘Income Taxes’ (issued January 2016)*
‘Revenue from Contracts with Customers’ (issued May 2014)*
‘Financial Instruments’ (issued July 2014)*
‘Leases’ (issued January 2016)*
Effective for periods
1 January 2017
1 January 2018
1 January 2018
1 January 2019
* not yet endorsed by the EU.
The application of these standards and interpretations is not expected to have a material impact on the Group’s reported financial
performance or position except as discussed below. However, they may give rise to additional disclosures being made in the financial
statements.
The Directors are in the process of assessing the potential impacts of IFRS 15 and IFRS 16. IFRS 15 will impact on both revenue
recognition and disclosure requirements. The standard becomes mandatory for periods commencing on or after 1 January 2018. IFRS 16
will impact on both lease liabilities and disclosure requirements. The standard becomes mandatory for periods commencing on or after
1 January 2019. At the date of this report both IFRS 15 and IFRS 16 have yet to be adopted by the EU.
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Further
Information
2 Segmental analysis
For management purposes, the Group is organised into the following two operating divisions:
• Gleeson Homes
• Gleeson Strategic Land
Segment information about the Group’s operations, including joint ventures, is presented below:
Revenue
Continuing activities:
Gleeson Homes
Gleeson Strategic Land
Discontinued activities
Total revenue
Profit on activities:
Gleeson Homes
Gleeson Strategic Land
Administrative expenses
Exceptional restructuring costs
Exceptional provision for diminution in value of investments
Financial income
Financial expenses
Profit before tax
Tax
Profit for the year from continuing operations
Note
2016
£000
2015
£000
113,633
28,432
96,078
21,510
142,065
117,588
3
-
237
142,065
117,825
19,465
10,163
29,628
(1,462)
-
-
512
(440)
28,238
(4,934)
23,304
17,384
8,147
25,531
(2,249)
(1,236)
(4,896)
496
(383)
17,263
(4,848)
12,415
Loss for the year from discontinued operations (net of tax)
3
(345)
(207)
Profit for the year attributable to equity holders of the parent company
22,959
12,208
The revenue in the Gleeson Homes segment relates to the sale of residential properties and land. All revenue for Gleeson Strategic
Land segment is in relation to the sale of land.
Balance sheet analysis of business segments:
Gleeson Homes
Gleeson Strategic Land
Group Activities/Discontinued
Operations
Net cash
2016
Assets
£000
2016
Liabilities
£000
106,440
(20,195)
50,633
(7,323)
2016
Net assets
£000
86,245
43,310
2015
Assets
£000
94,960
51,756
2015
Liabilities
£000
(5,788)
(13,213)
2015
Net assets
£000
89,172
38,543
323
23,244
(217)
106
6,067
(13,062)
(6,995)
-
23,244
15,809
-
15,809
180,640
(27,735)
152,905
168,592
(32,063)
136,529
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Further
Information
Notes to the Financial Statements (continued)
Other information:
Continuing operations:
Gleeson Homes
Gleeson Strategic Land
Group Activities
2016
Capital
additions
£000
932
8
-
940
2016
Depre-
ciation
£000
757
1
5
763
2015
Capital
additions
£000
868
-
2
870
2015
Depre-
ciation
£000
786
2
10
798
All the Group’s operations are carried out in the United Kingdom.
3 Discontinued operations
The Group disposed of certain assets and liabilities of the Gleeson Engineering Division of Gleeson Construction Services to Black
and Veatch Limited (“B&V”) in a prior period and is treated as a discontinued operation.
The Group disposed of certain assets and liabilities of the Gleeson Building Division of Gleeson Construction Services to GB Building
Solutions Ltd, in a prior period and is treated as a discontinued operation.
Revenue
Cost of sales
Gross loss
Administrative expenses
Operating loss
Loss before tax
Tax
Loss for the year from discontinued
operations
Loss per share: impact of discontinued operations
Basic
Note
10
Gleeson
Construction
Services
2016
£000
-
(6)
(6)
(330)
(336)
(336)
(9)
(345)
Total
2016
£000
-
(6)
(6)
(330)
(336)
(336)
(9)
(345)
2016
p
(0.64)
The cashflow statement includes the following relating to operating loss on discontinued operations:
Operating activities
2016
£000
(47)
Gleeson
Construction
Services
2015
£000
237
(275)
(38)
(169)
(207)
(207)
Total
2015
£000
237
(275)
(38)
(169)
(207)
(207)
-
-
(207)
(207)
2015
p
(0.39)
2015
£000
(73)
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Remuneration
Committee Report
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Further
Information
4 Exceptional items
Exceptional restructuring costs
Exceptional provision for diminution in value of investments
No exceptional costs were incurred in the current year.
2016
£000
-
-
-
2015
£000
(1,236)
(4,896)
(6,132)
Restructuring costs
In the prior year reorganisation costs of £1,236,000 were incurred on consultancy and legal costs relating to the Scheme of
Arrangement as detailed in Note 28.
Provision for diminution in value of investments
In the prior year the Group made a provision against its investment in GB Building Solutions Limited and GB Group Holdings Limited
(“GBGH”) which went into administration on 9 March 2015.
5 Expenses and Auditor’s remuneration
Profit for the year is stated after charging/(crediting):
Staff costs
Depreciation of plant and equipment (continuing operations)
Profit on sale of investment properties
Profit on sale of available for sale assets
Loss on sales of property plant and equipment
Auditor’s remuneration for:
• Audit of these financial statements
• Audit of financial statements of subsidiaries pursuant to legislation
• Taxation compliance services
• Other tax advisory services
• Other services
Note
6
2016
£000
2015
£000
16,129
13,772
763
-
(73)
129
65
12
30
61
-
798
(221)
(171)
104
63
11
32
25
33
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Further
Information
Notes to the Financial Statements (continued)
6 Staff costs
Wages and salaries
Redundancy
Compensation for loss of office
Share-based payments
Social security costs
Other pension costs
Note
29
22
Group
2016
£000
Group
2015
£000
Company
2016
£000
Company
2015
£000
13,415
10,930
1,271
-
-
420
1,749
545
89
632
266
1,312
543
-
-
(2)
80
31
181
89
632
15
37
49
16,129
13,772
1,380
1,003
The average monthly number of employees (including Directors) during the year was:
Gleeson Homes
Gleeson Strategic Land
Group Activities
Group
2016
No.
299
9
6
314
The average number of people employed by the Company (including Directors) during the year was six.
Directors’ remuneration
Full details of the Directors’ remuneration is provided in the audited part of the Remuneration Report on pages 44 to 63.
7 Financial income and expenses
Group
Financial income
Interest on bank deposits
Other interest
Unwinding of discount
Financial expenses
Bank charges
Net financial income
Note 19 discloses any further exposure for the Group to interest rate risk.
Group
2015
No.
249
10
7
266
2015
£000
4
1
491
496
2016
£000
4
-
508
512
(440)
(440)
(383)
(383)
72
113
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Further
Information
8 Tax
Group
continuing operations
Group
discontinued operations
Group
total
Note
2016
£000
2015
£000
2016
£000
2015
£000
2016
£000
2015
£000
Current tax:
Current year charge
Adjustment in respect of prior years
Current tax expense for the year
Deferred tax:
Current year expense
Adjustment in respect of prior years
Impact of rate change
3,797
45
3,842
-
3
3
23
23
23
1,335
4,959
(519)
276
(54)
(60)
Deferred tax expense for the year
1,092
4,845
Total tax
4,934
4,848
-
-
-
7
-
2
9
9
-
-
-
-
-
-
-
3,797
45
3,842
-
3
3
1,342
4,959
(519)
278
(54)
(60)
1,101
4,845
-
4,943
4,848
Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were
substantively enacted on 2 July 2013. Corporation tax has been calculated at 17.7% of assessable profit for the year (2015: 28.4%).
The charge for the year can be reconciled to the profit per the Statement of Comprehensive Income as follows:
Profit before tax on continuing operations
Loss before tax from discontinued operations
Profit before tax
Note
3
2016
£000
28,238
(336)
27,902
2016
%
2015
£000
17,263
(207)
17,056
2015
%
Profit before taxation multiplied by the standard rate of UK
corporation tax 20.0% (2015: 20.8%)
5,580
20.0
3,539
20.7
Tax effect of:
Expenses not deductible for tax purposes
Deduction in respect of share options exercised
Land remediation relief
Utilisation of tax losses not previously recognised
Deferred tax not recognised
Impact of rate change on deferred tax assets
Adjustments in respect of prior years - current tax
Adjustments in respect of prior years - deferred tax
23
Tax charge and effective tax rate for the year
99
(417)
(60)
-
(74)
289
45
(519)
4,943
0.4
(1.5)
(0.2)
-
(0.3)
1.0
0.2
(1.9)
1,313
7.7
-
-
110
-
(60)
-
(54)
-
-
0.6
-
(0.4)
-
(0.3)
28.4
17.7
4,848
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Further
Information
Notes to the Financial Statements (continued)
9 Dividends
Amounts recognised as distributions to equity holders in the year:
Interim dividend for the year ended 30 June 2016 of 4.5p (2015: 2.7p) per share
Final dividend for the year ended 30 June 2015 of 7.3p (2014: 4.9p) per share
2016
£000
2015
£000
2,433
3,948
6,381
1,448
2,629
4,077
The proposed final dividend for the year ended 30 June 2016 of 10.0p per share (2015: 7.3p) makes a total dividend for the year
of 14.5p (2015: 10.0p).
The proposed final dividend is subject to approval by shareholders at the AGM and has not been included as a liability in these
Financial Statements. The total estimated final dividend to be paid is £5,412,000.
10 Earnings per share
Continuing and discontinued operations
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings
Earnings for the purposes of basic earnings per share, being net profit attributable to equity
holders of the parent company
• Profit from continuing operations
• Loss from discontinued operations
Profit for the purposes of basic and diluted earnings per share
Number of shares
2016
£000
2015
£000
23,304
12,415
(345)
(207)
22,959
12,208
2016
No. 000
2015
No. 000
Weighted average number of ordinary shares for the purposes of basic earnings per share
53,907
53,614
Effect of dilutive potential ordinary shares:
• Share options
103
383
Weighted average number of ordinary shares for the purposes of diluted earnings per share
54,010
53,997
Continuing operations
Basic earnings per share
Diluted earnings per share
Discontinued operations
Basic loss per share
Diluted loss per share
Continuing and discontinued operations
Basic earnings per share
Diluted earnings per share
2016
p
43.23
43.15
2016
p
(0.64)
(0.64)
2016
p
42.59
42.51
2015
p
23.16
22.99
2015
p
(0.39)
(0.39)
2015
p
22.77
22.61
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Further
Information
Normalised earnings per share from continuing and discontinuing operations
Profit for the purposes of basic and diluted earnings per share
Adjusted for the impact of exceptional costs in the year
Normalised earnings
Normalised basic earnings per share
Normalised diluted earnings per share
11 Plant and equipment
Cost or valuation
At 1 July 2014
Additions
Disposals
At 30 June 2015
Additions
Disposals
At 30 June 2016
Accumulated depreciation
At 1 July 2014
Charge for the year
Disposals
At 30 June 2015
Charge for the year
Disposals
At 30 June 2016
Net book value
At 30 June 2016
At 30 June 2015
At 1 July 2014
2016
£000
2015
£000
22,959
12,208
-
6,132
22,959
18,340
2016
p
42.59
42.51
2015
p
34.21
33.96
Group
Plant and
equipment
£000
Company
Plant and
equipment
£000
4,270
870
(1,106)
4,034
940
(868)
4,106
3,002
798
(1,002)
2,798
763
(729)
2,832
1,274
1,236
1,268
-
14
-
14
-
-
14
-
4
-
4
5
-
9
5
10
-
The Group has recorded a depreciation charge of £763,000 (2015: £798,000), of which £62,000 (2015: £100,000) has been charged
in cost of sales and £701,000 (2015: £698,000) in administrative expenses.
The Company has recorded a depreciation charge of £5,000 (2015: £4,000), all of which has been charged in administrative
expenses.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Further
Information
Notes to the Financial Statements (continued)
12 Investment property
Group
Cost or valuation
At 1 July 2014
Disposals
At 30 June 2015 and At 30 June 2016
Freehold
investment
property
£000
571
(65)
506
Investment properties are included at Directors’ valuation. The properties are valued on a value-in-use basis.
The Company does not hold any investment property.
13 Interest in joint ventures
Share of results and investment in joint ventures
At 1 July 2015
Share of loss in joint ventures for the year
At 30 June 2016
The following table shows the aggregate amounts in respect of Group share of joint ventures:
Current assets
At 30 June
There are no significant contingent liabilities in the joint ventures.
Joint ventures
2016
£000
15
(15)
-
2016
£000
-
-
2015
£000
15
15
Genesis Estates (Manchester) Ltd
Residential property
development
50%
Ordinary
shares
England
26 March
Principal activity
Percentage
of equity held
Class
of shares
Country of
incorporation
Year end date1
1 Where the year end date of the joint venture is not coterminous with that of the Group, management accounts are used to incorporate the joint
venture’s share of results in line with the Group’s year end date.
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Further
Information
14 Other investments
Group other investments
At 1 July
Provision for diminuation in value
At 30 June
Other investments
2016
£000
-
-
-
2015
£000
4,896
(4,896)
-
The Directors consider that the carrying amount of other investments is £nil.
Other investments represent equity investment of £4,896,000 in GB Building Solutions Limited and GB Group Holdings Limited
(“GBGH”). On 9 March 2015, the Group was advised that GBGH had entered administration and as a consequence full provision has
been made against the value of the investment.
15 Investments in subsidiaries
Cost
At 1 July 2014
Additions
At 30 June 2015
Additions
At 30 June 2016
Company
£000
-
20,800
20,800
40,000
60,800
Investments in subsidiary undertakings are included in the balance sheet at cost less any provision for diminution in value.
During the year an additional investment of £40,000,000 was made in Gleeson Regeneration Limited.
Principal subsidiary undertakings
The following are the principal subsidiary undertakings of MJ Gleeson plc. MJ Gleeson plc owns 100% of the ordinary share capital
of the subsidiaries, all of which are incorporated in England.
All subsidiaries are registered in England and Wales and operate in the United Kingdom.
Principal activity
Gleeson Developments Limited
Gleeson Regeneration Limited
House building, housing regeneration and strategic land trading
House building and housing regeneration
Gleeson Strategic Land Limited1
Strategic land trading
Gleeson Developments (North East) Limited
House building and housing regeneration
1 shares held by Gleeson Developments Limited
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Further
Information
Notes to the Financial Statements (continued)
The following are the other subsidiary companies of MJ Gleeson plc:
Colroy Limited 3
Haredon Developments Limited 3
Gleeson Capital Solutions Limited
Gleeson Classic Homes Limited 1
Principal activity
Dormant
Dormant
Dormant
Dormant
Gleeson Construction Services Limited 2
In run off - Construction services
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Intermediate holding company
Dormant
Dormant
Dormant
Gleeson Homes (Holdings) Limited
Gleeson Homes (Southern) Limited 1
Gleeson Housing Developments Limited 1
Gleeson PFI Investments Limited
Gleeson Properties Limited
Gleeson Properties (Kingley) Limited 3
Gleeson Properties (Petersfield) Limited 3
Gleeson Services Limited
KW Cannock Properties Limited 4
MJ Gleeson (International) Limited
MJ Gleeson Group Limited
MJG (Management) Limited
Oakmill Properties Limited 3
Sindale Properties Limited 1
1 shares held by Gleeson Developments Limited
2 shares held by MJ Gleeson Group Limited
3 shares held by Gleeson Properties Limited
4 shares held by Gleeson Homes (Holdings) Limited
16 Inventories
Land held for development
Work in progress
2016
£000
50,488
63,750
2015
£000
47,767
60,455
114,238
108,222
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17 Trade and other receivables
Trade receivables
Amounts due from construction contract customers
VAT recoverable
Prepayments and accrued income
Available for sale financial assets
Amount due from subsidiary undertakings
Non-current
Current
Note
18
Group
2016
£000
Group
2015
£000
Company
2016
£000
Company
2015
£000
28,588
28,142
39
162
-
1,090
522
6,611
-
18
484
554
7,938
-
36,811
37,136
-
-
-
-
-
-
168
-
92,787
92,826
55,778
56,108
13,527
23,284
36,811
19,606
17,530
37,136
-
-
92,826
92,826
56,108
56,108
The Directors consider that the carrying amount of trade and other receivables approximates their fair value and includes an
allowance for doubtful debts estimated by the Group’s management based on prior experience and their assessment of specific
circumstances.
Available for sale financial assets due after more than one year represent receivables in respect of shared equity properties.
See note 19 for reference to credit risk associated with trade receivables and further disclsoures in respect of available for sale
financial assets.
Amounts due from subsidiary undertakings are unsecured, repayable on demand, and incur interest of 0% to 1% plus Bank of England
base rate.
18 Construction contracts
Contracts in progress at the balance sheet date:
Amounts due from contract customers included in trade and other receivables
Contract costs incurred plus recognised profits less recognised losses to date
Less: progress billings
At 30 June 2016, retentions held by customers for contract work amounted to £nil (2015: £nil).
Note
17
Group
2016
£000
-
-
-
-
-
Group
2015
£000
18
18
33,137
(33,137)
-
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Notes to the Financial Statements (continued)
19 Financial instruments
Risk exposure
MJ Gleeson plc operates a central treasury function providing services to the Group. The treasury function arranges loans and
funding, invests any surplus liquidity and manages financial risk. The treasury function is not a profit centre and no speculative
trades are permitted or executed. It operates within specific policies, agreed by the Board, to control and monitor financial risk
within the Group. Prudent and controlled use of financial instruments is permitted where appropriate, principally to reduce
fluctuation in interest costs.
Cash and cash equivalents
Cash and cash equivalents comprises cash and short-term deposits with a maturity of three days or less held by the Group and the
Company. The carrying amount of these assets equals their fair value.
Credit risk
The Group’s principal financial assets are trade and other receivables and investments.
The Group’s and Company’s credit risk is primarily attributable to its trade and other receivables. The amounts presented in the
balance sheet are net of allowance for doubtful debts, estimated by the Group’s management based on prior experience and their
assessment of specific circumstances.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit
ratings assigned by international credit rating agencies.
At 30 June 2016, the Group’s most significant credit risk was a privately-owned housebuilder and amounted to £4,550,000 (2015:
£2,419,000 from a local authority) of the trade and other receivables carrying amount, which was received subsequent to year end.
The Group’s remaining credit risk is spread over a large number of counterparties and customers.
Trade receivables ageing
The ageing of gross trade receivables at the reporting date was:
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 121-365 days
Past due more than one year
All trade receivables are from UK customers.
Group
2016
£000
Group
2015
£000
Company
2016
£000
Company
2015
£000
28,542
27,907
39
162
-
-
-
65
-
36
9
190
-
-
-
-
-
-
-
-
28,607
28,142
39
162
Trade receivables past due more than one year are largely retentions within the Gleeson Homes division. The amounts payable are
being finalised and are included at expected realisable value.
Included in trade receivables not past due are £6,916,000 (2015: £11,668,000) receivables due in more than one year.
In addition to the above, the Company has intercompany receivables which are repayable on demand.
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Balance at 1 July
Impairment loss recognised
Balance at 30 June
Group
2016
£000
-
19
19
Group
2015
£000
74
(74)
-
Company
2016
£000
Company
2015
£000
-
-
-
-
-
-
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Market risk
The Group has no significant exposure to currency risk or equity risk.
Interest rate risk
The Group closely monitors its exposure to variations in interest rates and, if this is significant as a result of the quantum of debt
and level of interest rates, will hedge the exposure using approved financial instruments such as interest rate swaps. At the year
end, the Group had no debt or related interest rate swaps.
A 1% increase in interest rates would improve the annual income of the Group and Company by £232,000 (2015: £158,000) based
on the cash balance at the year end. A 1% decrease would cause income to fall by the same amount.
Liquidity risk
The Group renewed a £20,000,000 three year credit facility with Lloyds Bank plc on 18 March 2016 and all banking is conducted by
Lloyds Bank plc. As at 30 June 2016 the Group had not drawn on the facility.
In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective
interest rates at the balance sheet date:
Bank balances
2016
Effective
interest
rate
%
2016
Due
within
one year
£000
2015
Effective
interest
rate
%
2015
Due
within
one year
£000
0.25
23,244
0.00
15,809
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the
impact of netting agreements:
Non-derivative financial liabilities
Group
As at 30 June 2016
Carrying
amount
£000
Contractual
cash flows
£000
6 mths
or less
£000
6-12
mths
£000
1-2
years
£000
2-5
years
£000
More than
5 years
£000
Trade and other payables
26,904
(26,904)
(23,751)
26,904
(26,904)
(23,751)
(37)
(37)
(658)
(658)
(2,458)
(2,458)
As at 30 June 2015
Trade and other payables
30,431
30,431
(30,431)
(19,913)
(10,436)
(30,431)
(19,913)
(10,436)
(82)
(82)
-
-
-
-
-
-
Company: The non-derivative financial liabilities of the Company in the current and prior year are predominantly intercompany
balances which are payable on demand. The external balances are payable within 6 months.
Exposure to currency risk
The Group has no exposure to foreign currency risk.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Notes to the Financial Statements (continued)
Fair values
The fair value of the Group’s financial assets and liabilities are not materially different from the carrying values. The following
summarises the major methods and assumptions used in estimating the fair values of financial instruments.
Available for sale financial assets
Balance at 1 July
Additions
Redemptions
Unwind of discount (finance income)
Fair value movement recognised in Other Comprehensive Income
Group
2016
£000
7,938
-
(853)
110
(584)
Group
2015
£000
8,116
25
(322)
119
-
Balance at 30 June
6,611
7,938
Available for sale financial assets represent shared equity loans advanced to customers and secured by way of a second charge on
the property sold. They are carried at fair value which is determined by discounting forecast cash flows for the residual period of
the contract. The difference between the nominal value and the initial fair value is credited over the deferred term to finance
income, with the financial asset increasing to its full cash settlement value on the anticipated receipt date.
Redemptions in the year of shared equity loans carried at £853,000 generated a profit on redemption of £73,000 which has been
recognised within Administrative Expenses in the Income Statement.
Forecast cash flows are determined using inputs based on current market conditions and the Group’s historic experience of actual
cash flows resulting from such arrangements. These inputs are by nature estimates and as such the fair value has been classified
as Level 3 under the fair value hierarchy laid out in IFRS 13: Fair Value Measurement. There have been no transfers between fair
value levels in the financial year.
Significant unobservable inputs into the fair value measurement calculation include regional house price movements based on
the Group’s actual experience of regional house pricing and management forecasts of future movements, the anticipated period
to redemption of loans which remain outstanding and a discount rate based on current observed market interest rates offered to
private individuals on secured second loans.
The key assumptions applied in calculating fair value as at the balance sheet date were:
• Forecast regional house price inflation: 2.5% - 4.0%
• Average period to redemption: 5.5yrs
• Discount rate: 8%
The sensitivity analysis of changes to each of the key assumptions applied in calculating fair value, whilst holding all other
assumptions constant, is as follows:
Change in assumption
Forecast regional house price inflation – increase by 1%
Average period to redemption – increase by 1 year
Discount rate – decrease by 1%
Increase/
(decrease)
in fair value
£
348,000
(308,000)
334,000
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Capital risk management
In line with the disclosure requirements of IAS 1, Presentation of Financial Statements, the Group regards its capital as being the
equity as shown in the Statement of changes in equity.
Note 27 to the Financial Statements provides details regarding the Company’s share capital movements in the period and there
were no breaches of any requirements with regard to any relevant conditions imposed by either the UKLA or the Company’s Articles
of Association during the period under review.
The primary objective of the Group’s capital management is to ensure that it maintains investor, creditor and market confidence
and to support its business and to maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in the light of changes in economic conditions. To maintain
or adjust the capital structure, the Group may adjust the dividend payment to shareholders and issue or return capital to
shareholders.
Neither the Company nor any of the subsidiaries are subject to externally imposed capital requirements.
20 Trade and other payables
Trade payables
Other taxation and social security
VAT payable
Accruals and deferred income
Amount due to subsidiary undertakings
Group
2016
£000
Group
2015
£000
15,552
28,021
437
-
566
225
10,915
2,978
-
-
26,904
31,790
Company
2016
£000
271
150
257
1,056
48,393
50,127
Company
2015
£000
404
267
208
869
168
1,916
The Directors consider that the carrying amount of trade payables approximates their fair value.
Amounts due to subsidiary undertakings are unsecured, repayable on demand, and incur interest of 0% to 1% plus Bank of England
base rate.
21 Provisions
At 1 July 2014
Provisions used during the year
At 1 July 2015
Provisions used during the year
At 30 June 2016
Non-current
Current
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Group
Onerous
leases and
dilapidations
£000
289
(16)
273
(62)
211
2016
£000
100
111
211
Group
Total
£000
289
(16)
273
(62)
211
2015
£000
59
214
273
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Notes to the Financial Statements (continued)
Onerous leases
Onerous leases relate to sublet properties. Where the rent receivable on the properties is less than the rent payable, a provision
based on present value of the net cost is made to cover the expected shortfall. The remaining lease commitment is 1 year. Market
conditions have a significant impact on the assumptions for future cash flows.
Dilapidations
The dilapidations provision covers the Group’s leased estate. The expected provision needed at the end of each lease is recognised
straight line over the term of the lease.
At 30 June 2016, the Company did not have any other provisions.
22 Employee benefits
Defined contribution pension plan
The Group operates a defined contribution pension plan. The assets of the pension plan are held separately from those of the Group
in funds under the control of the trustees.
Group
The total pension cost charged to the Statement of Comprehensive Income of £545,000 (2015: £543,000) represents contributions
payable to the defined contribution pension plan by the Group at rates specified in the plan rules. At 30 June 2016, contributions
of £67,000 (2015: £64,000) due in respect of the current reporting period had not been paid over to the pension plan. Since the
year end, this amount has been paid.
Company
The total pension cost charged to the Statement of Comprehensive Income of £67,000 (2015: £49,000) represents contributions
payable to the defined contribution pension plan by the Company at rates specified in the plan rules.
23 Deferred tax
Group
The deferred tax assets recognised by the Group and movements thereon during the current and prior year are as follows:
At 1 July 2014
Restatement
Credit to income
Impact of rate change
At 30 June 2015
Adjustment in respect of prior year
(Credit) / Charge to income
Impact of rate change
At 30 June 2016
Plant and
machinery
£000
517
35
(31)
-
521
25
(55)
(25)
466
Losses
£000
9,946
39
(4,928)
60
5,117
373
(1,399)
(247)
3,844
An analysis of the deferred tax balances for financial reporting purposes are as follows:
Deferred tax assets
Short-term
timing
differences
£000
50
(20)
-
-
30
121
112
(6)
257
Group
2016
£000
4,567
4,567
Total
£000
10,513
54
(4,959)
60
5,668
519
(1,342)
(278)
4,567
Group
2015
£000
5,668
5,668
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Further reductions in the UK corporation tax rate, to 19% with effect from 1 April 2017 and to 18% with effect from 1 April 2020,
were substantively enacted into law before the balance sheet date. In the opinion of the Directors, the relevant timing differences
are expected to reverse prior to 1 April 2020 and therefore deferred tax has been provided at a rate of 19.1%. If deferred tax
balances were restated at a rate of 18% rather than 19.1%, deferred tax assets would reduce by £263,000 to £4,304,000.
In March 2016 the UK Government announced that the reduction in the corporation tax rate on 1 April 2020 will be to 17% rather
than 18%; however, this change had not been substantively enacted as at 30 June 2016 so this does not impact the deferred tax
provisions in these financial statements. If deferred tax balances were restated at a rate of 17%, deferred tax assets would reduce
by £502,000 to £4,065,000.
At the balance sheet date, the Group has gross tax losses of £28,310,000 (2015: £30,976,000) of which £20,133,000
(2015: £25,821,000) have been recognised as a deferred tax asset. The Group has unrecognised tax losses of £8,177,000
(2015: £8,868,000) available for offset against future profits. Losses may be carried forward indefinitely against future taxable
trading profits.
Company
The deferred tax assets recognised by the Company and movements thereon during the current year are as follows:
At 1 July 2014
At 30 June 2015
Charge to income
At 30 June 2016
24 Operating lease arrangements
Operating leases: lessee
Minimum lease payments under non-cancellable operating leases recognised as an
expense for the year
Minimum lease payments
Plant and
machinery
£000
Short-term
timing
differences
£000
-
-
15
15
-
-
-
-
Group
2016
£000
543
543
Total
£000
-
-
15
15
Group
2015
£000
392
392
At the balance sheet date, the Group has outstanding commitments for minimum lease payments under non-cancellable operating
leases, which fall due as follows:
Within one year
Within two to five years
After five years
The Company had no minimum lease payments under non-cancellable operating leases.
Group
Land and
buildings
2016
£000
554
1,153
995
2,702
Group
Land and
buildings
2015
£000
387
558
226
1,171
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Notes to the Financial Statements (continued)
Land and building lease terms vary between one to ten years, depending on market conditions.
Where possible, the Group always endeavours to sub-lease any vacant space on short-term lets. An onerous lease provision is
recognised where the rents receivable over the lease term are less than the obligation to the head lessor.
In the current year, onerous lease provisions of £62,000 were released (2015: £16,000). See note 21 for details.
Operating leases: lessor
The Group’s total future minimum sub-lease receipts expected under non-cancellable sub-leases as at 30 June 2016 is £192,000
(2015: £384,000). These receipts are included within the minimum rent receivables table below.
The Company has no future minimum sub-lease receipts.
Minimum rental income under operating leases recognised as revenue for the year
Group
2016
£000
192
Group
2015
£000
196
The total rental income relates to properties which the Group had previously occupied as operating lease lessees and are now
sublet.
At the balance sheet date, the minimum rent receivables under non-cancellable operating leases are as follows:
Within one year
Within two to five years
25 Analysis of cash and cash equivalents
At 1 July 2014
Cashflow
At 30 June 2015
Cashflow
At 30 June 2016
26 Bonds and sureties
Group
Land and
buildings
2016
£000
192
-
192
Group
£000
13,687
2,122
15,809
7,435
23,244
Group
Land and
buildings
2015
£000
192
192
384
Company
£000
-
848
848
511
1,359
Group and Company
As at 30 June 2016, the Group had bonds and sureties of £9,717,000 (2015: £7,283,000) provided by financial institutions in support
of ongoing contracts.
The Directors have determined that the Group and Company require no specific provision for bonds, sureties or guarantees for
subsidiary companies.
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27 Share capital
Issued and fully paid ordinary shares:
At the beginning of the year
Shares issued during year
At the end of the year
Ordinary shares
2016
No. 000
2016
£000
2015
No. 000
2015
£000
53,697
1,074
-
-
423
8
54,120
1,082
53,697
53,697
1,074
1,074
The Company has one class of Ordinary share which carries no rights to fixed income.
On 19 December 2014 the parent company of the Group became MJ Gleeson plc replacing MJ Gleeson Group plc. Under a Scheme
of Arrangement (“Scheme”) entered into by the former parent company (see Note 28), the share capital of MJ Gleeson Group plc
was cancelled and the shareholders of that company received one share of MJ Gleeson plc for each share it previously held in
MJ Gleeson Group plc.
With effect from 19 December 2014 the rights attaching to the new MJ Gleeson plc shares were the same as those attaching to the
MJ Gleeson Group plc shares immediately prior to 19 December 2014. Upon the implementation of the Scheme, the new MJ Gleeson
plc shareholders will have the same voting rights and the same proportionate interest in the profits, net assets and dividends of
MJ Gleeson plc as they previously held as a MJ Gleeson Group plc shareholder.
In order to reflect the book value of MJ Gleeson Group plc, the new MJ Gleeson plc shares issued under the Scheme had a nominal
value of 146 pence each, while the old MJ Gleeson Group plc shares had a nominal value of 2 pence each. However, following the
confirmation of the capital reduction of MJ Gleeson plc on 22 January 2015, the nominal value of the new MJ Gleeson plc shares
was reduced to 2p each.
The number of Ordinary shares of 2p in issue as at 30 June 2016 was 54,120,295 (2015: 53,697,480).
At 30 June 2016, the Employee Benefit Trusts (“EBT”) held 60,000 (2015: 70,000) shares at a cost of £251,000 (2015: £306,000).
The shares are held in the EBT for the purpose of satisfying options that have been granted under the employee share ownership
plans. Of these ordinary shares, the right to dividend has been waived on none of these shares (2015: nil).
All shares issued during the year were the result of share options being exercised; details of share options are given in note 29.
28 Scheme of Arrangement
On 19 December 2014 the Group completed a Scheme of Arrangement to change its corporate structure by introducing a new
holding company. The purpose of the restructure was to protect the continuing businesses of the Gleeson Group from potential
liabilities of the legacy building contracting and engineering businesses and contracts, the majority of which were disposed of in
2005 and 2006. The old Group holding company, MJ Gleeson Group plc and its subsidiary Gleeson Construction Services Ltd, are
now held indirectly by the new holding company, MJ Gleeson plc.
The Court approved Scheme of Arrangement also approved a capital reduction of the old holding company, since renamed
MJ Gleeson Group Limited, to reduce its net asset position to an amount which would cover any potential future liabilities.
The capital reduction became effective on 22 January 2015.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
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Notes to the Financial Statements (continued)
29 Share-based payments
During the year to 30 June 2016, the Group had three share-based payment arrangements. The recognition and measurement
principles in IFRS 2 have not been applied to those options granted before 7 November 2002 in accordance with the transitional
provisions in IFRS 1 and IFRS 2.
Following the implementation of the Scheme of Arrangement (See Note 28) (“Scheme”) on 18 December 2014, all share based
payment arrangements in place at that time in respect of the shares of MJ Gleeson Group PLC were replaced on a one for one basis
with shares in MJ Gleeson PLC. It is the intention of the Directors that awards under the MJ Gleeson Group PLC employee share
plans will not vest early as a result of the Scheme but will continue on the same basis under the MJ Gleeson PLC employee share
plans, other than they will ultimately deliver MJ Gleeson PLC shares rather than MJ Gleeson Group PLC shares.
A summary of the share-based payment arrangements now reflecting shares in MJ Gleeson PLC are shown below:
Arrangement
Contractual
life
Vesting conditions
Share purchase
plan
Rolling
scheme
The Group matches shares purchased by employees on a 1 for 3 basis. The shares
purchased by the employees are immediately exercisable. The Group matching
shares are only exercisable after 3 years.
Settlement
basis
Equity
Performance
share plan (PSP)
- 2012
3 years
Performance
share plan (PSP)
- 2014
3 years
Performance
share plan (PSP)
- 2015
3 years
For the Chief Executive Officer the award vested in whole on the third
anniversary of the date of grant on 5 November 2015 as the performance
condition was met. The performance condition was based on the total
shareholder return for the three financial years from 1 July 2012 to 30 June 2015.
For Executive Directors and senior executives the award will vest in whole or
in part on or after the third anniversary of the date of grant if performance
conditions have been met. The performance condition is based on the total
shareholder return for the three financial years from 1 July 2014 to 30 June 2017.
For the Executive Directors the award will vest in whole or in part on the third
anniversary of the date of grant of 30 September 2015 if performance conditions
have been met. The performance condition was based on the total shareholder
return for the three financial years from 1 July 2015 to 30 June 2018.
Equity
Equity
Equity
Share options granted after 7 November 2002
Fair value is used to measure the value of the outstanding options.
Share purchase plan
The fair value of each share granted in the share purchase plan is equal to the share price at the date of the grant. Shares are
granted on a monthly basis.
Performance share plan
The fair value per option for the performance share plan scheme has been calculated using a modified Monte Carlo model.
The inputs into the model at each grant date and the estimated fair value were as follows:
Date of grant
The model inputs were:
• Share price at grant date
• Total shareholders return target
• Exercise price
• Expected volatility
• Expected dividends
• Expected life
• Risk-free interest rate
• Fair value of one option
PSP
05/11/12
PSP
30/09/14
PSP
30/09/15
£1.52
£3.50
£0.00
36%
1.50%
£3.90
£4.80
£0.00
32%
2.00%
£4.82
£4.92
£0.00
32%
2.00%
3 years
3 years
3 years
0.27%
£0.23
1.27%
£1.44
0.76%
£2.37
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Further
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Expected volatility was determined by calculating the historical volatility of the Company’s share price; volatility was measured
over the previous 3 years.
Further details of the option plans are as follows:
Date of grant
Outstanding at 1 July 2014
Granted in the year
Forfeited
Exercised
Outstanding at 30 June 2015
Granted in the year
Forfeited
Exercised
Outstanding at 30 June 2016
Share purchase plan
MJ Gleeson
Group plan
MJ Gleeson
Group 2014 plan
PSP
PSP
PSP
Monthly
No. of shares
Monthly
No. of shares
05/11/12
No. of shares
30/09/14
No. of shares
30/09/15
No. of shares
74,587
4,414
(261)
(20,628)
58,112
-
(104)
(10,762)
47,246
-
423,015
-
-
-
-
573,888
(27,591)
-
423,015
546,297
3,827
-
-
3,827
6,743
(30)
-
-
(59,231)
-
279,158
(758)
(423,015)
-
9,782
-
487,066
279,158
-
-
-
-
-
-
-
Remaining contractual life
Rolling scheme
Rolling scheme
nil
1.3 years
2.3 years
Weighted average exercise price
Weighted average share price at date of
exercise - current year
Weighted average share price at date of
exercise - prior year
-
£3.19
£1.17
-
£4.57
£0.00
-
n/a
n/a
-
n/a
n/a
-
n/a
n/a
Share options granted prior to 7 November 2002
Date of grant
Outstanding at 1 July 2014
Outstanding at 30 June 2015
Outstanding at 30 June 2016
Share purchase plan
MJ Gleeson
Group plan
MJ Gleeson
Group 2014 plan
Monthly
No. of shares
Monthly
No. of shares
540
540
540
-
-
-
Remaining contractual life
Rolling scheme
Rolling scheme
Weighted average exercise price
Weighted average share price at
date of exercise - current year
Weighted average share price at
date of exercise - prior year
n/a
n/a
n/a
n/a
n/a
n/a
Total shares outstanding under
share purchase plans
MJ Gleeson
Group plan
MJ Gleeson
Group 2014 plan
Total
No. of shares
No. of shares
No. of shares
47,786
9,782
57,568
The total share based payment cost charged to the Statement of Comprehensive Income was £420,000 (2015: £266,000).
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
99
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Notes to the Financial Statements (continued)
30 Capital commitments
At 30 June 2016, the Group had no capital commitments (2015: £nil).
31 Related party transactions
Identity of related parties
The Group has a related party relationship with its joint ventures and key management personnel.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.
Transactions with key management personnel
The Group’s key management personnel are the Executive and Non-Executive Directors, as identified in the Remuneration Report
on pages 44 to 63.
In the year, the Group purchased cladding materials from a company, JDP Contracting Services Ltd, in which Jolyon Harrison is a
director. During the current year the Group purchased £25,000 (2015: £20,000) of goods from the company. The terms were at
normal market rates and payment terms. There were no guarantees provided.
Other than disclosed above and in the Remuneration Report, there were no other transactions with key management personnel in
either the current or preceding year.
Identity of related parties with which the Company has transacted
The Company receives charges from various suppliers in respect of services for the whole Group. The Company allocates and
consequently invoices these charges to subsidiaries.
Related party transactions
Subsidiaries
Related party transactions
Subsidiaries
Admini-
strative
expenses
2016
£000
7,856
7,856
Admini-
strative
expenses
2015
£000
2,939
2,939
Receivables
outstanding
2016
£000
92,787
92,787
Receivables
outstanding
2015
£000
55,776
55,776
Payables
outstanding
2016
£000
48,393
48,393
Payables
outstanding
2015
£000
168
168
100
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
101
Further Information
103 Five Year Review
104 Corporate Directory
104 Shareholder Information
104 Financial Calendar
104 Information regarding our website
102
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Five Year Review
2016
£000
2015
£000
2014
£000
2013
£000
2012
£000
Revenue
142,065
117,588
81,442
60,656
40,807
Reinstatement of inventories and contract provisions
Exceptional restructuring costs
-
-
-
(1,236)
800
-
1,028
2,879
-
-
Operating profit
28,166
22,046
12,064
6,009
2,724
Provision for diminution in value of investments
Net finance income/(cost)
Profit before tax
Tax (charge)/credit
Profit after tax
-
72
(4,896)
113
-
96
28,238
17,263
12,160
(230)
5,779
-
-
(4,934)
(4,848)
5,499
4,320
23,304
12,415
17,659
10,099
302
3,026
(130)
2,896
Discontinued operations
(345)
(207)
(231)
1,344
710
Profit for year attributable to
equity holders of the parent company
Total assets
Total liabilities
Net assets
Total dividend per share for the year
Earnings per share from continuing operations
Earnings per share - normalised*
Net assets per share
22,959
12,208
17,428
11,443
3,606
180,640
168,592
152,577
140,112
116,220
(27,735)
(32,063)
(24,486)
(28,023)
(15,826)
152,905
136,529
128,091
112,089
100,394
pence
pence
pence
pence
pence
14.5
43.2
42.6
283
10.0
23.2
34.2
254
6.0
33.4
17.2
241
2.5
19.1
13.7
212
5.0
5.5
0.0
190
* Normalised earnings per share exclude the impact of exceptional costs.
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
103
Strategic Report
Corporate
Governance
Remuneration
Committee Report
Financial
Statements
Further
Information
Further Information
Corporate directory
REGISTERED OFFICE
MJ Gleeson plc
6 Europa Court, Sheffield Business
Park, Sheffield, S9 1XE
AUDITOR
KPMG LLP
1 Sovereign Square, Sovereign Street,
Leeds, LS1 4DA
REGISTERED NUMBER
9268016
Incorporated in England and Wales
BANKERS
Lloyds Bank plc
14 Church Street, Sheffield, S1 1HP
COMPANY SECRETARY
Stefan Allanson
WEBSITE
www.mjgleeson.com
SOLICITORS
Simmons & Simmons
City Point, One Ropemaker Street,
London, EC2Y 9SS
STOCKBROKERS AND FINANCE
ADVISORS
N+1 Singer
One Bartholemew Lane,
London, EC2N 2AX
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London, EC2Y 9LY
REGISTRARS AND TRANSFER
OFFICE
Capita Asset Services
The Registry, Bourne House,
34 Beckenham Road, Beckenham,
Kent, BR3 4TU
Shareholder information
SHAREHOLDER ENQUIRIES
Any shareholder with enquiries should,
in the first instance,
contact our registrars using the
address provided in the
Corporate Directory.
Financial calendar
Financial year end
Full year results announced
Ex-dividend date for final dividend
Record date for final dividend
Annual General Meeting
Final dividend payment
SHARE PRICE INFORMATION
London Stock Exchange
Symbol: GLE
INVESTOR RELATIONS
MJ Gleeson plc
6 Europa Court, Sheffield Business
Park, Sheffield, S9 1XE
Email: enquiries@mjgleeson.com
Tel: 0114 261 2900 Fax: 0114 261 2939
30 June 2016
26 September 2016
17 November 2016
18 November 2016
8 December 2016
15 December 2016
Information regarding our websites
For more information on our homes, investor relations and career opportunities please visit www.mjgleeson.com.
104
MJ Gleeson plc: Report and Accounts for the year ended 30 June 2016
The paper in this report is a Forest Stewardship Council (“FSC”) certified product,
produced with a FSC mixed sources pulp which is fully recyclable, biodegradable
and chlorine free. It is manufactured within a mill which complies with the
international environmental ISO 14001 standard.
The report has been printed using environmentally friendly vegetable based inks.
Formulated on the basis of renewable raw materials, vegetable oils are non-
hazardous and from renewable sources. Over 90% of solvents and developers used
are recycled for further use and recycling initiatives are in place for all other
waste associated with this production.
The print house chosen for production of this report is FSC and ISO 14001
certified with strict procedures in place to safeguard the environment through all
processes, including ongoing initiatives to reduce carbon footprint.
ISO 14001
REGISTERED FIRM
MJ GLEESON PLC6 Europa Court, Sheffield Business Park, Sheffield S9 1XETel: 0114 261 2900 Fax: 0114 261 2939 Email: enquiries@mjgleeson.com www.mjgleeson.comThank you!We would like to thank our employees who are essential to our recent success.Their skill and dedication has been invaluable in making Gleeson what it is today.